How The Advanced Premium Tax Credit Works.
The Health Insurance Marketplace will estimate the individual’s premium tax credit. This information will be determined using details about household income, one’s family composition, whether those receiving health care coverage could be involved in other non-Marketplace programs, and various other data.
Once the Health Insurance Marketplace has determined the individual’s amount of tax credit, that taxpayer can choose to have a percentage or even all of their tax credit paid in advance directly to the insurance company. If someone chooses this option, they will see a significant drop in their monthly premiums, making it more possible to keep up with the payments. When someone chooses to pay using their tax credits, it is called “advanced payments of the premium tax credit” or “advance credit payments”. For those who decide they would rather keep their tax credits, they can opt out of paying anything; however, they will then be expected to continue paying the full premium.
If You Take Advantage of This Credit
If you go on and take advantage of advance credit payments, you will be required to show the amount paid on your behalf when you file your taxes. The amount that has already been paid must come out of your actual premium tax credit. Even if you don’t have to file a tax return for any other reason, if you’ve used advance credit payments you will need to go on and file.
Those who choose not to take advantage of advance credit payments will have the option of getting the full benefits of their premium tax credit. This credit will either provide you with a larger tax refund or lower the amount of money you owe the IRS.
Continue to Report Changes
If you are one of the many people who went to the Marketplace for your healthcare coverage and is receiving advance credit payments, then you are expected to keep the Marketplace up-to-date with your life. When you undergo any lifestyle changes, you need to make a report. By making the appropriate reports, you can continue to receive the kinds of financial assistance that you need. Keeping up with reports will also make it easier during tax time when you have to reconcile the difference between your advance credit payments and your premium tax credit.
What Kind of Changes Should You Report?
The Marketplace should be made aware of any of the following changes:
A change in household income such as Social Security benefits, loss of wages, pay raises, and disability assistance.
- If you get married
- If you get divorced
- If you give birth to a child
- If you adopt a child
- If your family undergoes serious changes such as someone moving out of the home, death, etc.
- If you move to a new residence
- If you become eligible or ineligible for health care coverage offered by your employer or the government.
The advance credit payment is a good option for those who struggle to keep up with their premiums. This government program works to keep families covered with insurance while still maintaining their other bills. While this will lower one's ability to receive a tax refund, it can make it easier to continue with their regular way of life while keeping their insurance.