Health care costs, as well as insurance premiums, are high, and this makes access to quality health services out of reach for many individuals. With constant changes in healthcare, the understanding and knowledge of such credits will benefit you greatly. Some full-time workers are fortunate enough to qualify for a great health insurance plan through their employer. However, some employer-sponsored plans may not be effective for all of your needs, or your portion of the premium may be too expensive for your budget. Some people, such as contract workers and self-employed individuals, may only have access to individual policies and may be responsible for the full premium amount. Under current laws, you may qualify for a tax credit on your health insurance premium. However, there are eligibility requirements that you must meet in order to qualify for this credit.
Standard Income Requirements That Play a Factor
The income requirement is one of the most significant eligibility requirements that you must meet if you want to qualify for this tax benefit. To meet the income requirements, your gross annual income must fall in between the range of full poverty line limit and up to 400 percent of the poverty line limit. Those whose income falls below this range, you may qualify in select circumstances. However, those who earn income above this limit will not qualify for a tax credit and must pay premium expenses in full on their own. Keep in mind that the income requirements regarding the premium credit relate to the number of individuals in the home. There are different requirements for income limits and ranges depending on whether you have one, two or four or more individuals residing in the home.
Identifying Your Options When Filing Your Taxes
If you are a married taxpayer, how you file your personal income tax return can also play a role in your qualification for the credit. You cannot qualify if you file with the married filing separately status. However, there are some exceptions to this rule. For example, if you are a documented victim of domestic abuse or violence, the filing status requirement may be waived. In addition, if you have been legally separated from your spouse for more than six months, you may be able to file with an unmarried status if you pay dependent care housing expenses and earn more half of the expenses for your household during the tax year.
What are Premium Tax Credits
Premium tax credits (PTC) is a credit that is refundable upon helping eligible families and individuals to cover their health insurance premiums bought through the Health Insurance Marketplace. For most of 2017, Republican lawmakers tried to repeal the Affordable Care Act’s (ACA) premium tax credit to no avail. So, for at least 2018, the credit is still here. Also, most states have much larger credits for 2018 than they had in previous years. Individuals having a modified adjusted gross income of federal poverty level from 100 to 400 percent can receive this subsidy and for those individuals purchasing health insurance through each state’s government health insurance. Even recent immigrants in the US lawfully and have income at the below-level, poverty level are eligible.
How to get Premium Tax Credit
First, certain requirements must be met to get this subsidy. Afterward, a tax return must be filed. You can get an advance payment sent directly to your health insurance agency. Doing this allows you to pay a lower amount in premiums monthly. Otherwise, you can get a lump sum payment along with your federal tax refund. Also, enrolling is how to get a premium tax credit, and the marketplace can determine your eligibility for advance credit payments. There are variations to be eligible of PTC. In addition to the income falling in a certain range, you can’t use the Married Filing separately, filing status on a tax return with the exception to certain domestic issues. That being said, some of those reasons would be: not having the capability to be claimed as a dependent of someone else, not being able to get affordable coverage through an employer-sponsored plan that is eligible and offers minimum value, not being eligible for Medicare, Medicaid, TRICARE, CHIP, or other government programs, and more. It’s imperative to report changes in your circumstances immediately when they occur to ensure smooth sailing of these credits. PTCs are the way to go. And you should take full advantage of these benefits especially while they last.
How Can I be eligible to Receive Premium Tax Credit
Now that we know what are premium tax credits and know how to get a premium tax credit, the following answers the question, “how can I be eligible to receive premium tax credit”:
- Income falling in a certain range
- Don’t use the Married Filing Separately filing status on a tax return
- An exception in filing includes the allowance of certain, spousal abandonment and domestic abuse victims to claim the filing of Married Filing Separately
- No one can claim you as a dependent of someone else
- A family member or you have through a Health Insurance Marketplace a health insurance coverage
- Having the inability to get affordable coverage through an employer-sponsored plan that is eligible and offers minimum value
- Not eligible for Medicare, Medicaid, TRICARE, CHIP, or other government programs
- Pay the premiums’ share not covered by advance credit payments
How Can I be Eligible to Receive Premium Tax Credit when there’s Change in Circumstances
Certain changes to your family size, income, or household may affect your premium tax credit’s amount. The tax refund may be altered from these changes, or you may owe tax. Thus, it will behoove you to promptly report these changes to obtain the proper amount and type of financial assistance.
Other Eligibility Requirements That Are Reviewed
While these are the two most common and significant requirements that you must meet in order to qualify for the premium tax credit, keep in mind that there are a few other limiting requirements as well. For example, when you register online to receive the credit and to purchase a plan through the Healthcare.gov website, your physical address will be reviewed. Requirements may vary slightly based on specific geographic areas. In addition, the number of people in your household may also affect these requirements and your overall eligibility. A final factor that can affect your eligibility for the credit relates to the cost of available plans in your area. All factors will be analyzed when you apply for the credit online.
Can You Qualify for a Credit?
The best way to determine if you qualify for this financial credit is to apply online through the government’s established website. Remember that there are special enrollment periods that you must pay attention to if you want to use this credit. The primary enrollment period is around the rollover for the new year, but there are also windows when you may apply if some of your circumstances have changed during the year. For example, you may qualify during a special enrollment period if:
- You lost your job recently
- Your marital status has changed
- You have recently moved
These are some of the more common qualifications for special enrollment, but there are others to explore as well. If you qualify for the credit, you can elect to receive the credit on your tax return when you file at the end of the year. You can also elect to receive the credit over the course of the year with a direct reduction in your premium bills each month.
How to get Premium Tax Credit when Reconciling and Claiming the Credit
You must attach Form 8962, Premium Tax Credit when filing a federal income tax return. You must include your advance credit payments’ amount while claiming the premium tax credit and reconciling the credit. If you fail to file your tax return, you will not be able to benefit from advance credit payments in future years. This filing can be done digitally, and receive a digital copy through the IRS online. The form will be in a PDF form where you can fill in the blanks online. When it comes to financial aid and subsidies, the premium tax credit is created to assist in making health insurance premiums more affordable for people with middle and low income. Household incomes can be as high as 400 percent of the poverty level.
Conclusion
What are the premium tax credits? They are credits that are refundable upon helping eligible families and individuals to cover their health insurance premiums bought through the Health Insurance Marketplace. Individuals having a modified adjusted gross income of federal poverty level from 100 to 400 percent can receive this subsidy and for those individuals purchasing health insurance through each state’s government health insurance. Even recent immigrants in the US lawfully and have income at the below-level, poverty level are eligible.
MyGov Healthcare Staff
