The Taxpayer Advocate Service developed the Premium Tax Credit Change Estimator to help you estimate how your premium tax credit will change if your income or family size change during the year.
When your life changes, the amount of your premium tax credit might change, too. Life changes can affect the amount of your premium tax credit but will not affect your advance payments of the credit, which is an estimation of your premium tax credit, unless you notify the Marketplace of the change.
For example, if your advance payments of the credit are based on an estimate that your income for the year will be $25,000 but you get a new job that will increase your income to $30,000 for the year, you should notify the Marketplace of the change. Otherwise, it is likely that your premium tax credit will be less than your advance credit payments, which will result in additional tax liability to you.
Remember, the Estimator only gives you an estimate and you will not know your actual premium tax credit until you file your tax return.
This estimator does not estimate premium tax credit changes when:
- You move to a different ZIP code.
- You marry or divorce.
The premium tax credit is a tax credit established by the Affordable Care Act. Starting in 2014, if you get your health insurance coverage through a state or the federal Health Insurance Marketplace you may be eligible for the premium tax credit. This credit can help make health insurance more affordable to you and your family. In general, you may be eligible for the credit if:
- You enroll in a qualified health plan through the Marketplace for a member of your family (you, your spouse or your dependents),
- For the same months your enrolled in Marketplace coverage, one or more of the enrolled family members is ineligible for other coverage - such as through an employer or government plan,
- Your household income is at least 100% and no more than 400% of the federal poverty line for your family size,
- If you are married, you file a joint return with your spouse. However, if you are a victim of domestic violence or spousal abandonment, you may be able to file as married filing separate, and
- You cannot be claimed as a dependent by another person.
You may elect to have advance payments of the credit paid directly to your insurance provider – this will help offset premium costs. You would then list the amount of the advance payments and reconcile it with the actual credit amount when you file your tax return. You can also choose not to have advance payments and receive the premium assistance provided by the credit all at once when you file your return.
In both cases, you will need to claim the credit on your tax return.
The credit is based on your:
- Total annual household income,
- Family size (you, your spouse, and dependents),
- Filing status,
- Address, and
- The number and ages of the family members who are enrolled and are not eligible for other health coverage.
If you choose to take advance payments of the credit, the Marketplace determines your eligibility for advance payments of the credit using projections of your income and number of personal exemptions (you, your spouse, and dependents) when you enroll in a qualified health plan.
If this information changes during the year and you don't notify the Marketplace, the amount of the advance payments of the credit may be substantially different from the amount of the premium tax credit you take on your tax return.
Changes in circumstances that can affect the amount of your premium tax credit include:
- Changes in your household income,
- Birth or adoption,
- Marriage or divorce,
- Moving to a different address,
- Gaining or losing eligibility for other health care coverage, and
- Other changes affecting income and your family.
You need to provide:
- An estimate of your monthly income,
- Your family size (includes you, your spouse and your dependents),
- The age of each family member enrolled in Marketplace coverage and whether they are eligible for coverage outside of the Marketplace (for example: coverage through an employer, Medicare, or Medicaid),
- Your expected filing status,
- The state and county where you live,
- The cost of the benchmark plan used in calculating your advance credit payments if you live in a state that is not participating in the federal Marketplace at Healthcare.gov,
- The monthly premium for the health insurance in which you are enrolled, and
- The monthly advance premium credit payments for your coverage (if any).