Do you qualify for the Premium Tax Credit (PTC) for 2021 tax year?

The Premium Tax Credit is a refundable credit that helps eligible individuals, and their families pay the premiums in advance for their qualified health plan offered through a Marketplace. This credit may reduce the amount of tax you owe or even qualify you for a refund. 

 This is how it works: When you enroll in a plan through the Health Insurance Marketplace, the Marketplace will estimate the amount of the credit for the tax year with the information you provided about your household income, family size, and other factors that will determine your and your family’s qualification for coverage. Based on that estimate you can use your premium tax credit (all, some, or none) paid directly to your insurance company to lower your monthly insurance payment (premium). 

 However, if you use more advance payments of the tax credit you can end up repaying the excess when you file your federal income tax return. On the other hand, if you receive less Premium Tax Credit than you were supposed to, you can claim it on your tax return when you file your taxes. For 2020 tax year only, you are not required to repay any excess advance payments. If you already filed a 2020 tax return and reported or repaid the excess advance payments, you don’t need to file an amended return or take any other action. 

 To qualify for this credit, you must meet the following requirements:

 1. Your household income must be at least 100 (not to exceed 400) percent of the federal poverty line for your family size (exceptions apply)

2. You can’t file a Married Filing Separate tax return (exceptions apply)

3. Cannot be claimed as a dependent by another person

4. During the same month you or a family member:

• Must have health insurance coverage through a Health Insurance Marketplace.

• Are not able to obtain a health insurance plan through your employer that provides minimum value (“if the plan covers at least 60% of the expected total allowed costs for covered services. It must also provide substantial coverage of in-patient hospitalization and physician services”).

• Are not able to obtain coverage through a government program like Medicaid, Medicare, CHIP or TRICARE.

• Must pay the share of premiums not covered by advance credit payments.

 Note: For tax years other than 2020, you MUST file a tax return even if you are not required to do so if you are receiving advance payments through the Premium Tax Credit. You will receive Form 1095-A, Health Insurance Marketplace Statement from your Health Insurance Marketplace. You must reconcile the advance credit payments on your tax return with this form to determine if you received more than what you were entitled to based on your income.

 Important: You must report any life changes (your household, income, or family size) to the Marketplace as they happen throughout the year. Also, if you received unemployment compensation anytime during 2021, you may be eligible for a Premium Tax Credit that covers the entire premium costs for the Marketplace plan for the whole household, regardless of your current household income amount. 

Ztax will gladly answer any questions you may have regarding the Premium Tax Credit. Feel free to send us a message through email or text message with your questions. 

Source (s): 

1. IRS. “The Premium Tax Credit-The Basics” October 29, 2021. IRS.GOV.

2. Centers for Medicare and Medicaid Services. “Unemployment Compensation, Advance Payments of the Premium Tax Credit, etc.” June 30, 2021. Marketplace.cm.gov.

3. HealthCare.gov. “Premium Tax Credit.”