Want to know more about Advance Premium Tax Credit? This is a one stop guide for all the answers to your questions.
Have you ever come across the term ‘Advance Premium Tax Credit’ and never knew what it meant? Are you curious to find out what this is? Who can apply for this premium tax credit and what does it offer? If you have all these questions and more, then stay tuned to get all your answers.
What Is Advance Premium Tax Credit?
The Affordable Care Act allows people who purchase their own medical coverage to get subsidies that lower your amount. There are two types of subsidies that are available: the Advanced Premium Tax Credit and Cost Sharing Reduction.
The Advanced Premium Tax Credit is a premium aid given by the government to individuals and families whose income is less than 400% of the Federal Poverty Level. The money given through the APTC helps you in paying a fraction of your medical coverage dividends. Thus, resulting in a more feasible insurance. The amount of money you receive depends on your yearly income. You should know that a low income means that you will get a higher subsidy.
In addition to this, premiums depend on your state’s health insurance marketplace and the second cheapest silver plan that they offer. The APTC is created in such a way that if someone has the second cheapest silver plan, the premium would be equivalent to a percentage of the yearly salary.
The Advanced Premium Tax Credit is added to your health insurance bonuses; in order to keep your medical insurance, you have to pay each month.
What Are The Premium Tax Credit Income Limits
The premium tax credit income limit should be at least 100 – 400% of the Federal Poverty Line for your family. Exceptions can be made if your income is less than 100%. Moreover, you must also know that this is not the only aspect that is counted. Other factors are also observed before a premium tax credit is granted.
Who Is Qualified For The Advance Premium Tax Credit?
You are qualified for the advance premium tax credit if:
- Your annual household salary is less than 100 to 400% than the given Federal Poverty Level.
- Your company does not provide any health insurance that is less than 9.5% of your income or covers at least 60% of the perks.
- You are not qualified for a government based health insurance like Medicaid.
- You are married and have issued a joint return.
- You are not dependent on anyone.
How Can I Apply For The Advance Premium Tax Credit?
You can apply for the Advanced Premium Tax Credit by enrolling yourself in any health insurance coverage via the Marketplace. The premium tax credit is not programmed. Thus, you should apply for it when you claim for an insurance by having the Marketplace site figure out the amount of the credit with the help of the data provided, or you can pay all the dividends and then later ask for the tax credit back on the tax return in the following year.
How Does The Premium Tax Credit Work?
Firstly, you need to complete an application on the Health Insurance Marketplace. Once you are done with this, you will get an approximate amount of the credit you can claim in the next year.
After this, you can figure out for what purpose you want to use your credit for. This money is known as the Advanced Premium Tax Credit because you can either have all or a fraction of it paid to you prior to receiving your premium. The Marketplace lets your insurance company know about your credit, and also compensates them. The company can then add the credit to your monthly premium which results in lower payments.
You can likewise stand by to guarantee your credit when you record your assessment form for the year you were secured by your arrangement. On the off chance that you just applied a piece of it to your premium, you can guarantee the unused segment when you record, as well. It’s the distinction between getting the credit as a singular amount, or paying less in premiums every month. The choice is all yours!
How Do I Use My Advanced Premium Tax Credit?
The health coverage marketplace will immediately send your APTC to every policy that you are eligible for. Moreover, it will also tell you about the low monthly dividend. If you believe that your salary might increase, or your family size may decrease or increase, you should think about signing up for the APTC. Any APTC that is utilized depends on the data that you provide. However, if for some reason your personal information is altered, then you will have to pay back to the IRS. It is highly significant to instantly tell your insurance company about your change in income or family size.
Will any changes in my income or family size affect the premium tax credit?
A simple answer to this question is, yes. Advanced premium tax credit depends on your income and family size. Therefore, any change in these factors will alter and bring about a change in your APTC policy. A few situations that can result in a change in the APTC amount are marriage, divorce, and/or birth or adoption of a child. In addition to this, an increase or decrease in your salary will also lead to a change in the APTC. Moreover, if you become suitable for an employer sponsored or government based insurance, that will also change the APTC.
You should immediately inform the Health Insurance Marketplace if any of these changes take place. The marketplace will renew the information needed to find out your premium tax credit. After this, they will change your APTC according to your new information.
Now that you know all the nitty gritty details about APTC, you can apply for it and make your life easier.