How ACA tax credits work
The premium tax credit is the main way the Affordable Care Act makes health insurance affordable. It lowers your monthly bill, and most people use it right away instead of waiting for tax time.
How the amount is figured
The Marketplace looks at the benchmark plan in your area: the second-lowest-cost Silver plan. It then works out how much you're expected to pay for that plan based on your income. Your tax credit covers the difference.
You can use that credit on any Bronze, Silver, Gold or Platinum plan. Choose a plan that costs less than the benchmark and you pay less, sometimes $0. Choose one that costs more and you pay the difference.
How you get it
Most people take the credit in advance. It's sent straight to your insurance company each month, so your bill is lower from the start. You can also choose to take some or all of it when you file your taxes.
Why your income estimate matters
Your credit is based on what you expect to earn in the coming year. When you file your taxes, the IRS compares the credit you used with what you actually qualified for (using Form 8962 and the Form 1095-A the Marketplace sends you).
- If you earned less than expected, you may get money back.
- If you earned more, you may have to pay some of the credit back.
The easiest way to avoid a surprise is to report income changes during the year. We can update your application for you.
Extra savings on Silver plans
If your income is on the lower side, Silver plans may also come with cost-sharing reductions: a lower deductible, lower copays and a lower out-of-pocket maximum. These savings are only available on Silver plans.
Tax credit rules can change from year to year. A licensed agent will check the current rules for your household.
See your tax credit
We'll estimate your credit and show what each plan would cost you after it. Free, no obligation.