Credit finer points
  1. You cannot claim the premium assistance credit if someone else can claim you as a dependent on their tax return.
  2. If insurance for a dependent is paid for by Taxpayer A, and the dependent is claimed on a return by Taxpayer B, the premium assistance credit is calculated, reconciled and claimed on Taxpayer B’s return.
  3. Individuals who fail to pay all or part of their share of the premium will be given a mandatory three-month grace period before their coverage is terminated.
  4. No premium assistance credit is allowable for an individual who is eligible for minimum essential coverage outside of the Marketplace unless the coverage available is not affordable or does not pay for at least 60% of covered costs.
  5. Individuals who receive a premium assistance credit will be required to file a tax return for the year in which they received the credit.
  6. Individuals or couples who experience a change in marital status or other household circumstance, experience a decrease in income of more than 20%, or receive unemployment insurance, may update eligibility information or request a redetermination of their eligibility for the premium assistance credit.
  7. Although the credit generally will be payable in advance directly to the insurer, individuals can elect to purchase health insurance out-of-pocket and apply to the IRS for the credit at the end of the tax year. The credit is refundable.
  8. If a qualified health plan offers benefits in addition to the essential health benefits required to be provided, or a state requires a qualified health plan to cover benefits in addition to the required essential health benefits, then the portion of the premium for the plan properly allocable to the additional benefits will not be taken into account in determining either the monthly premium or the adjusted monthly premium used in computing the premium assistance amount. That is, the portion of the premium that is allocable to the additional benefits will be disregarded in determining the premium assistance credit amount.
  9. If an individual enrolls in a qualified health plan and a standalone dental benefit plan, the portion of the premium applicable to pediatric dental benefits will be treated as a premium payable for a qualified health plan.
  10. Premium assistance credits and cost-sharing reduction payments will not be counted as income when determining eligibility for any federal program or for any state or local program financed in whole or in part with federal funds.
  11. Married taxpayers won't be able to claim a premium assistance credit for a tax year if they file separate returns for that year. (Exception: This requirement is waived for a married taxpayer who is a victim of domestic violence.)
  12. Employer-provided insurance must offer coverage for any adult child up to age 26, even those who are not dependents. However, if an adult child who is not a dependent declines coverage, the parents would not face a penalty. Parents would only face a penalty for uninsured children if they are claimed as dependents.
  13. The premium assistance credit amount will be tied to the cost of the second-lowest cost silver plan (adjusted for age) that:
    1. Is in the rating area where the individual resides,
    2. Is offered through a Marketplace in the area in which the individual resides, and
    3. Provides self-only coverage in the case of an individual who purchases self-only coverage, or family coverage in the case of any other individual.
  14. Medical expense deduction – The amount of the premium that can be deducted as a medical expense will be limited to the portion of the premium that is not offset by the premium assistance credit. As a result, the taxpayer's “out-of-pocket” costs for the qualified health plan still will be deductible as a medical expense (subject to the limitations of the deduction). Also, when deducting medical expenses on Schedule A, the premium assistance credit must be subtracted from premiums paid, even if the credit was not used.
  15. Reconciliation of excess advance premium assistance credit payments – If the premium assistance payments made over the course of the year are greater than the premium assistance credit calculation when the individual files his or her federal tax return, the excess advance payment is treated as an increase in tax. But where the household income is less than 400% of the federal poverty level, the amount of the increase in tax is capped as the following:
    • Less than 200% of the federal poverty level = $600 cap
    • 200% but less than 300% of the federal poverty level = $1,500 cap
    • 300% but less than 400% of the federal poverty level = $2,500 cap
  16. An alien individual who is lawfully present in the U.S. will be treated, for purposes of the premium assistance credit, as an “applicable taxpayer” with a household income equal to 100% of the federal poverty level for a family of the size involved if:
    1. The individual’s household income is not greater than 100% of the applicable federal poverty level, and
    2. The individual is not eligible for Medicaid because of the individual’s status as an alien.
    3. The lawfully present alien individual will be eligible to claim the premium assistance credit, even if the individual’s household income level would otherwise have precluded him from qualifying as an “applicable taxpayer.” The allowable credit will be based on the individual’s having household income equal to 100% of the applicable federal poverty level, even if the income is below 100% of the federal poverty level.
    4. While this is available to legal aliens, it is not available to U.S. citizens.
  17. An Individual will be treated as “lawfully present” for purposes of claiming the premium assistance credit only if the individual is, and is reasonably expected to be for the entire period of enrollment for which the credit is being claimed, a citizen or national of the U.S. or an alien lawfully present in the U.S. An individual is a lawful permanent resident of the U.S. if he or she has been lawfully accorded the privilege of residing permanently in the U.S. as an immigrant under U.S. immigration law (i.e., the individual has received a green card from the U.S. Citizenship and Immigration Services [USCIS]) and that status hasn’t been revoked and hasn’t been administratively or judicially determined to have been abandoned).
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