What is the Premium Tax Credit for Health Insurance?

What is the Premium Tax Credit for Health Insurance?

A premium tax credit is a form of financial assistance that helps with the cost of buying health insurance. If you enrolled in a new plan recently, you may have qualified for one.

Who is Eligible for a Premium Tax Credit?

Premium tax credits are available to individuals and families who:

  • Have a household income between the federal poverty line and 400% of the poverty line (highlighted in the chart below).
  • Purchased a Health Insurance Marketplace plan (on the Marketplace or an eligible plan on your insurer’s website)
  • Are U.S. citizens or are lawfully present in the United States.

You are not eligible if you can receive affordable coverage through your job, or if you qualify for one of the following:

  • Medicare
  • Medicaid
  • Children’s Health Insurance Program (CHIP)

Learn how to estimate your income for the Marketplace. leaving site icon

How Does the Premium Tax Credit Work?

The information you provided on your Marketplace application, such as income, family size and the type of plan you purchase, was used to see if you qualified for a premium tax credit.

If you qualified for the premium tax credit, you then decided if you wanted to have all, some, or none of your estimated credit applied to your monthly premiums.

If you chose not to have advance credit payments, you may claim the premium tax credit when you file your tax return for the year. This will either lower the amount of taxes you owe on your return or increase your refund.

If you chose to have all or some of the credit paid in advance, you may have to reconcile this on your income tax return. In some cases, the amount of advance payments that the government sent on your behalf will differ from the premium tax credit that you may claim.

Why would the amount of my premium tax credit differ from my advance credit payments?
If there have been changes to your family size, income or employment during the year, the amount of your premium tax credit can change. When these things change, be sure to update your information in your Marketplace account.

Notifying the Marketplace of a change decreases the chance that there will be a difference between your advance credit payments and the actual premium tax credit. The following are some events that can affect the amount of your premium tax credit:

  • Your household income changes.
  • You get married, divorced, or have a child.
  • You gain employer-sponsored health care coverage.

If you experienced any of these changes and did not report this to the Marketplace, your actual premium tax credit may differ on your tax return from the advance credit originally estimated by the Marketplace.  

How Does this Affect my Tax Filing?

The Marketplace will send you a 1095-A form showing your premium amount and advance premium tax credit. You will use this information to report your coverage on your tax return.

Premium tax credits can be confusing, but hopefully we’ve made it a little easier! If you still have questions, many tax advisors can help, or you can find more information at healthcare.gov/taxes leaving site icon or at irs.gov. leaving site icon

Do You Qualify for a Tax Credit?

When you apply for a new health plan, make sure your information is up to date.

Has your income changed?  Did you have or adopt a child?  These factors and others can impact your health plan choices and your premium tax credit, giving you an opportunity to get help paying for health insurance if you qualify.

Use our Premium Tax Credit Estimator tool to see if you qualify for a premium tax credit.

Originally published 1/29/2015; Revised 2018, 2022