Real Life Examples

The information for the family is as follows:

• Tax year: 2023
• $4,700 monthly income
• 4 household members: Parents age 32 and 34 and two children under 14
• They plan to file jointly
• They live in Weber County, Utah
• Their monthly insurance premium, before any tax credit, is $1,458
• Elected advance credit payments of $1,163 per month

No Changes: Assuming there are no changes to their income, premiums, or family size:

• Premium tax credit for the year: $13,356
• Advance credit payments for the year: $13,956
• They will have to repay $600

• The family's estimated annual income: $56,400
• Percentage of the federal poverty line: 188%
• Total premiums for the year: $17,496

Changes: If the household income increases to $5,200 per month from July through December:

• The Premium tax credit decreases to: $12,840
• If their advance credit payments remain the same at $13,956
• They will need to repay $1,116

The information for the family is as follows:

• Tax year: 2023
• $6,200 monthly income
• 3 household members: 50 year old with two adult children aged 22 and 24 attending college.
• Plan to file unmarried head of household
• They live in Massachusetts
• Their benchmark insurance premium is $2,024 per month
• Their monthly premium, before any tax credit, is $2,007
• Elected advance credit payments of $1,200 per month

Assuming there are no changes to their income, premiums, or family size:

• Premium tax credit for the year: $17,520
• Advance credit payments for the year: $14,400
• Additional premium tax credit: $3,120

• The family's estimated annual income: $74,400
• Percentage of the federal poverty line: 299%
• Total premiums for the year: $24,084

The percent of your income that you are considered able to afford for your and your family's health insurance.

The benchmark plan is the second lowest cost silver plan available in your area that covers the members of your family (you, your spouse and your dependents) who are enrolled in Marketplace coverage and not eligible for other health insurance coverage such as employer-sponsored or government-sponsored coverage.

The premium tax credit is the lesser of:

• The premiums for the plan in which you and/or your family members enroll,

or

• The premium for your benchmark plan minus your contribution amount.

The contribution amount is the amount you are considered to be able to afford to pay for health insurance. It would be the amount you pay if you enroll in your benchmark plan.

Determined by multiplying your annual household income by your applicable percent.

Generally you (if no one can claim you as a dependent), your spouse (if married and both spouses are on the same return), and anyone else that you are able to claim as a dependent.

The poverty guidelines published by the Department of Health & Human Services.

One of the state or the federal exchanges where you can shop for and purchase health insurance. For more information, go to healthcare.gov.

This is the total cost of the plan you choose on the Exchange before the premium tax credit is applied.

Household income is your modified adjusted gross income (MAGI) and the MAGI of your spouse if you file a joint return, plus the MAGI of your dependents who are required to file a federal tax return.

Modified adjusted gross income is the adjusted gross income as reported on Form 1040 plus any:

• Foreign earned income exclusion,
• Nontaxable Social Security benefits (including tier 1 railroad retirement benefits), and
• Tax-exempt interest.

It does not include Supplemental Security Income (SSI).

Marketplace insurance plans are categorized by metal levels: bronze, silver, gold, and platinum. The metal level is based on how much the insurer pays for services covered under the plan.

A silver plan is a health insurance plan where the insurer pays on average 70% of the cost of covered services.

The premium tax credit is limited by comparing the cost of your coverage to that of the second lowest cost silver plan that covers you and your family.

If you are enrolled in more expensive coverage, you will pay the additional amount. However, if you are enrolled in coverage that costs less, your share of the premium will also be less.

For more information, go to healthcare.gov