Health Insurance Premium Tax Credit

By | November 25, 2013

Starting in 2014, individuals and families can take a new premium tax credit to help them afford health insurance coverage purchased through an Affordable Insurance Exchange. The premium tax credit is refundable so taxpayers who have little or no income tax liability can still benefit.



Health Insurance Premium Tax Credit

The credit also can be paid in advance to a taxpayer’s insurance company to help cover the cost of premiums.Think of the premium tax credit like a discount on monthly health insurance premiums.



Affordable Insurance Exchange

They are available to people with incomes below qualifying levels—in other words, to those who may otherwise struggle to pay the normal price for monthly health insurance premiums. How much assistance you receive is based on how much money you make and the size of your family. But the final cost of your health insurance plan will depend on additional factors like where you live, your health and whether or not you smoke.


IRS Regulations on Insurance Premium Tax Credit

On May 18, 2012, the Department of the Treasury and the IRS issued final regulations which provide guidance for individuals who enroll in qualified health plans through Exchanges and claim the premium tax credit, and for Exchanges that make qualified health plans available to individuals and employers. On Jan. 30, 2013, the Department of the Treasury and IRS released final regulations on the premium tax credit affordability test for related individuals. On April 30, 2013, the Department of the Treasury and the IRS issued proposed regulations relating to minimum value of eligible employer-sponsored plans and other rules regarding the premium tax credit. The proposed regulations solicit public comments.


Eligibility Medicaid, Medicare, CHIP, TRICARE, student health or state high risk pool programs

Additionally, Notice 2013-41, issued on June 26, 2013, provides information for determining whether or when individuals are considered eligible for coverage under certain Medicaid, Medicare, CHIP, TRICARE, student health or state high risk pool programs. This determination will affect whether the individual is eligible for the premium tax credit. Comments may be submitted electronically, mailed or hand delivered to the IRS. On June 28, 2013, the Department of the Treasury and IRS issued proposed regulations on the new reporting requirements for Exchanges

There are generally two ways of the premium tax credits: throughout the year as a discount on your health insurance premiums purchased through the Marketplace, or at the end of the tax year when you file your annual income tax return.