Premium Tax Credit Form 8962
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If you received healthcare through the Marketplace, you will need to file a tax return to report your health insurance and tax credit amount for the year you were covered. For your 2021 - 2025 Returns, the rules expanding the PTC set by the American Rescue Plan Act have been extended through 2025 after being set to expire in 2022. This means that those above 400% of the federal poverty line may still qualify and the credit amount is generally larger for singles and most families. In general, if your health insurance premium exceeds 8.5% of your household income, you may qualify for the PTC under these regulations.
The extension of these thresholds is part of the Inflation Reduction Act or IRA; see how this bill affected green energy credits for home improvements and the electric vehicle tax credit.
How to Claim
Health Insurance and the Premium Tax Credit
You are no longer required to report your health insurance on your tax return unless you or a family member were enrolled in health insurance through the Marketplace and advance payments of the Premium Tax Credit were made to your insurance company to reduce your monthly premium payment. If you purchase health insurance and receive a 1095-A at the end of the year, you will need to report this on your income tax return.
The amount of the Premium Tax Credit is calculated based on the plans available to you, your household income, and your family size. Household income is your modified adjusted gross income or AGI of every member of your family combined. This amount can be complicated; use the Healthcare.gov to enroll in a plan and calculate your advance credit amount for you. Then, use eFile.com to prepare your return to calculate the amount you are owed or amount you owe back. If your household income is not within 400% of the federal poverty line, your credit repayment is not protected and you would need to pay this back if you took advance payments you were not eligible for.
You can claim payments in advance towards your monthly health insurance premium when you apply for health insurance through the Marketplace. The advance payments of the PTC are estimates, meaning they may not be exactly what you are owed which is why a tax return is needed to reconcile the amounts. If your income, family size, filing status, or other circumstance sees a change during the year, you can notify the Marketplace about this change so your advance payments are adjusted. Otherwise, the difference will be calculated when you file your return the following the year.
Important: If you e-file your return and do not add Form 8962 reporting the Premium Tax Credit as someone who had health insurance through the marketplace, the IRS will reject your return. On eFile.com, you can re-efile your return by retrieving and including your 1095-A to let the eFile software generate Form 8962 for you. You can also attach a written explanation for its absence if you do not have this form or cannot get it.
See more details on the Premium Tax Credit via IRS Publication 974.
Will You Qualify for the Premium Tax Credit?
How do I get advance payments? How do I claim the Premium Tax Credit?
Here is a high-level overview and 3 interactive simple steps to take to find out if you might qualify for the Premium Tax Credit. Especially if you are employed by a small business, you should carefully examine together with your employer if you qualify as this could substantially reduce your monthly health premium payments. If you do, the small business might than also consider to not offer a group health plan so you could purchase a plan through the Marketplace.
Premium Tax Credit qualification criteria:
- You do not qualify for coverage through an employer or government plan
- Your employer does not offer affordable employer-based health insurance plans - see details on affordability of employer coverage.
- You buy health insurance through the Marketplace and pay the share of premiums which aren't covered by the advance credit payments
- You are within certain income limits - see details below.
- You cannot be claimed as a dependent on another person's tax return, AND
- You do not file as married filing separately (unless you are a victim of domestic abuse and spousal abandonment).
Take the following 3 steps to get answers to your Premium Tax Credit qualification questions:
- Step 1: Check if your income is at least 100% but no more than 400% of the poverty line: Poverty Line Tool .
- Step 2: Calculate your Premium Tax Credit amount: Premium Tax Credit Tool .
- Step 3: Check or shop the Health Marketplace or Exchange for health insurance plans and determine the best fit for you.
- Marketplace: If you and/or family member(s) obtained health insurance through the Health Insurance Marketplace (or the Exchange) at HealthCare.gov and if advance payments of the premium tax credit were made to your insurance company to reduce your monthly premium payment, then the eFile Tax App will generate Form 8962 with your tax return - eFileIT. In that case, the marketplace is required to provide you Form 1095-A by January 31 of the following year. You will be asked to enter the data from form 1095-A on you eFile.com tax return. Keep 1095-A for your records as you do not submit this form with your tax return when you eFileIT.
- Employer: As a small business employer, you might want to compare the per employee health premium cost of a small business group with that of a healthcare marketplace plan. As a small business and employee of that business, you might experience a significant reduction in health premium fees. As a result, you might not sign up for or cancel a private or group health plan.
- Employee: If you were an employee and you received health insurance through your employer, the employer(s) will provide Form 1095-C by early March of the following year- however, you don't have to wait until then to file your return as you might get your information in a different way from your employer. This form will report whether they offered you health insurance coverage; if they did, information will be shown about that. Information on 1095-C might be relevant if you had to purchase health insurance via the marketplace - see above. If you do wish to claim the premium tax credit, you will need Part II of Form 1095-C.
This page specifically covers Form 8962 which is used for the Premium Tax Credit (PTC). The PTC is a refundable tax credit that can be claimed by eligible persons and families with low to moderate incomes (between 100% and 400% of the federal poverty line) to help individuals afford health insurance purchased through the Health Insurance Marketplace (or the Exchange) at HealthCare.gov.
When you prepare and e-file your tax return on eFile.com, we will calculate and report your Premium Tax Credit amount on your tax return as well as reconcile the advance credit payments made on your behalf with the actual Premium Tax Credit amount.
At eFile.com, we cover all the healthcare tax forms in the following pages:
- Form 1095-A-Health Insurance Marketplace Statement
- Form 1095-B-Health Coverage
- Form 1095-C-Employer-Provided Health Insurance Offer and Coverage
- Form 8962-Premium Tax Credit (this page).
2021 - 2025 Premium Tax Credit
As part of the American Rescue Plan Act or third stimulus package, marketplace healthcare premiums have become more affordable. The bill makes the credit more accessible as well as increases the amount - these increases are set to last through 2025. In general, individuals will receive the credit so that their healthcare premium is no more than 8.5% of their household income. The changes also mean that those who are not within 400% of the federal poverty level (FPL) may qualify for some of the credit. For the most part, people enrolling in a new healthcare plan will see an overall lower premium.
If you are already enrolled in a plan and have not done so already, re-submit your application for healthcare to see for these changes. Otherwise, you may expect to see these credits when you file your next tax return. Also, if you receive unemployment compensation, you may see additional benefits or credits when applying for a plan.
Premium Tax Credit Qualifications
You can qualify for the credit if you meet all of the following requirements:
- You do not qualify for coverage through an employer or government plan,
- You buy health insurance through the Marketplace,
- You are within certain income limits,
- You cannot be claimed as a dependent on another person's tax return, AND
- You do not file as Married Filing Separately (unless you are a victim of domestic abuse and spousal abandonment).
You are not eligible for the credit if you enroll in an employer-sponsored health insurance plan (including retiree coverage), even if the plan is not affordable or fails to provide minimum value.
Affordability of Employer Covers for Employees and their Family
As an employee, your employer generally offers one or multiple healthcare plans for you and your family. If the lowest plan offered is not affordable for you, then you may be able to claim the PTC and get healthcare through the Marketplace. Generally, coverage is considered affordable to you if the premium you pay for self-only coverage of the minimum value does not exceed around 9.5% of your household income - this value changes year-to-year:
- 2024: 8.39% of your household income
- 2023: 9.61% | 2022: 9.83% | 2021: 9.83%.
A minimum value plan covers at least 60% of expected total costs for your covered services and provides substantial coverage of in-patient hospitalization plus physician services.
If your employer offers you an Individual Health Reimbursement Arrangement (ICHRA), then you are not allowed to take the PTC for Marketplace coverage unless your ICHRA is considered unaffordable and you opt-out of that program.
Income Values Under the Federal Poverty Line
Individuals and families whose household income is between 100% and 400% of the federal poverty line for their family size are generally eligible for the credit. You may still qualify for the credit if you make more than the thresholds below. The federal poverty guidelines are established each year by the U.S. Department of Health and Human Services. Below, the lesser number is the Federal Poverty Line or FPL. Any amount over is within a certain percentage of the FPL which affects the mount of the Premium Tax Credit.
Below are the current year income values that fall between the 100% and 400% federal poverty line (for residents of one of the 48 contiguous states or Washington D.C.). You can use these values for your next return, but know that eFile.com will determine this for you:
- $14,580 - $58,320 for one individual
- $19,720 - $78,880 for a family of two
- $24,860 - $99,440 for a family of three
- $30,000 - $120,000 for a family of four
- $35,140 - $140,560 for a family of five
- $40,280 - $161,120 for a family of six
- $45,420 - $181,680 for a family of seven
- $50,560 - $202,240 for a family of eight
Note: For larger families, the federal poverty minimum level increases by $5,140 per household member.
If you need additional help determining the federal poverty level for your household, here is a convenient calculator for this:
Federal Poverty Level Calculator
Unfortunately, you will not qualify for the credit if you are also eligible for coverage through your state's Medicaid program that is above the federal poverty levels.
For the purposes of qualifying for the Premium Tax Credit, it is your modified adjusted gross income (or MAGI) plus the adjusted gross income or AGI of every other individual in your family who is required to file a tax return. Modified AGI is your AGI plus any excluded foreign income, nontaxable Social Security benefits (including Tier 1 Railroad Retirement benefits), and tax-exempt interest received or accrued during the tax year. However, it does not include Supplemental Security income (SSI).
How Much of the Premium Tax Credit May Need to Be Repaid?
If you receive an excess of this credit, you may owe some or all of it back - this would be the difference between the amount you received and the amount you were owed. Your repayment may be partially protected if you fall within 400% of the federal poverty line. The tables below show the limit based on your filing status and your level of poverty.
2023 Limits for Repayment of Advance Premium Tax Credit Payments
300% - 400%
More than 400%
None, not protected
None, not protected
2024 Limits for Repayment of Advance Premium Tax Credit Payments
300% - 400%
More than 400%
None, not protected
None, not protected
To avoid any repayment, enter honest and accurate figures when applying for this aid.
Married Filing Separately Status
Generally, you cannot use the married filing separate filing status and claim the Premium Tax Credit on your tax return. However, there is an exception for taxpayers who are victims of domestic violence and spousal abandonment; they can claim the relief from the married filing joint filing status requirement for no more than three consecutive years.
According to the IRS, a married taxpayer who lives apart from his or her spouse for the last six months is considered unmarried for the entire year if he or she meets the following requirements:
- Files a separate tax return,
- Maintains a home with a dependent child for more than half the year, AND
- Pays for over half the cost of the household during the year.
Premium Tax Credit Estimates
The Marketplace will use the information you provide to them about your family and household income to estimate the credit amount you can claim on your tax return. You can use that estimate to decide if you want to have all, some, or none of your credit to be paid directly to your insurance company in advance so the credit can be applied to your monthly premiums.
If you want to have some or all of your credit paid in advance, you will be required to report on your tax return the difference between the amount of advance payments that the government sent on your behalf and the premium tax credit that you may claim based on your family size and household income. However, if you do not want to have any of your credit paid in advance, you can claim the entire credit on your tax return, which will either increase your refund or lower the amount of taxes you owe.
Premium Tax Credit Amount
The Affordable Care Act bases your credit amount on an income scale. Households and individuals with lower incomes get a larger credit while those with higher incomes receive a smaller credit.
Since the Premium Tax Credit is also refundable, you will receive the difference of the credit amount and your tax liability if your credit amount is more than your tax liability. If you don't owe any taxes, you can get the full amount of the credit as a refund. However, if you receive advance payments of the credit, you will need to reconcile the payment with the actual premium tax credit amount (which is calculated by eFile.com on your tax return).
If the credit on your return is less than your advance credit payments, the difference of the two values will either be added to your balance due or subtracted from your refund. However, if the credit is more than your advance credit payments, the difference will be subtracted from your taxes due or added to your refund.
Reporting the Premium Tax Credit
You can claim the credit in one of the following ways:
- Have the credit paid in advance to your insurance company in order to decrease your monthly premium payments (you will need to reconcile the amount paid in advance with the actual credit you calculate) OR
- Claim all of the credit on your tax return.
The Marketplace will send you Form 1095-A, Health Insurance Marketplace Statement, showing your premium amounts and your advance credit payments by January 31 of the year following the year of coverage. You can use the information from the statement to enter it into your eFile.com account and your Premium Tax Credit will be calculated for you on your return. The advance credit payments made on your behalf will be reconciled with the actual premium tax credit amount.
Family Situation Changes
You will need to report any changes to the Marketplace to make sure you get the correct advance payment amount. Report any life-changing events to the Marketplace, including:
- Marriage or divorce
- Birth or adoption
- Child on your policy turning 26 or a dependent changing their status so they are no longer your dependent
- Changes in individual or household income
- Changes in physical address
- Someone in your household getting coverage via Medicaid, Medicare, or Children’s Health Insurance Program (CHIP)
- Losing or gaining health care coverage or eligibility
- Incarceration or release from incarceration
- Other changes affecting household size and income.
Be aware that these changes may allow you to apply for insurance through the Marketplace during its special enrollment period that permits health care plan changes after the original enrollment deadline. Generally, the special enrollment period is open for 60 days from the date of the life event.
You should report any income and household changes to the Marketplace during the year.
How to Claim the Premium Tax Credit
The IRS requires you to file a tax return so you can continue qualifying for advance tax payments on your health insurance from the Marketplace. In order to do this, you will need to add the information from your Form 1095-A into your eFile.com account. This is done in the Healthcare section of your account. After you complete your return, we will generate eFileIT Form 8962 for you based on the information you have entered from your Form 1095-A. The 8962 form will be e-filed along with your completed tax return to the IRS.
If you did not e-file your return with the Form 8962 for the Premium Tax Credit, the IRS will reject your return asking for this information. If you have already e-filed your return on eFile.com, you can simply return to your account, add the information from your 1095-A, and re-file your return.
For further assistance with the Premium Tax Credit, contact us at eFile.com and we will help you file your return so you can fulfill the IRS requirement and claim the advance tax payments.
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