Are Subsidies Available To Help Pay For The Costs of Health Insurance Premiums And Other Healthcare Costs?


There is a subsidy called a "Premium Tax Credit (PTC)" for eligible individuals who have household income between 100% and 400% of the federal poverty level (FPL). This means the lower your household income, the larger your premium tax credit subsidy. An advance payment of the premium tax credit is also available which will help lower and middle income Americans pay for health insurance premiums throughout the year. This credit may also be a refundable tax credit when the individual files their federal income tax return.

In addition to the Premium Tax Credit, there is also a "cost-sharing" subsidy that may be available to individuals whose household is between 100% and 250% of the FPL. More details on the Premium Tax Credit and Cost-Sharing subsidy are discussed below.

Who Is Eligible For The "Premium Tax Credit"?

An individual MUST meet ALL of the following requirements to claim the credit:

  • Enroll in a qualified health plan through the Marketplace or State Exchange

  • Must have household income that ranges from 100% to 400% of the FPL

  • Must be lawfully present in the United States

  • Must NOT be incarcerated

  • Must NOT be eligible for minimum essential coverage through an employer-sponsored health plan

  • Must NOT be eligible for coverage through a government program such as Medicare Part A, Medicare Advantage Plans (Medicare Part C), Most Medicaid Coverage, Children's Health Insurance Program (CHIP), Most TRICARE coverage, Veterans' health care, Peace Corps Volunteers Health Plan, and Refugee Medical Assistance

  • Must NOT file a federal income tax return as Married Filing Separately (an exception applies to victims of domestic abuse or spousal abandonment) AND

  • Must NOT be claimed as a dependent by another individual

How Do I Get the Advance Premium Tax Credit?

Eligible applicants automatically apply when they sign up for health insurance on the Health Insurance Marketplace or state exchange. If you are eligible for the advance premium tax credit, you can choose to use the full amount allowed each month towards your monthly health insurance premium. You may also choose a reduced amount or elect out of receiving any advance premium tax credits. If you do not receive the full amount of advance premium tax credits you are entitled to, you can claim a refundable premium tax credit on your federal income tax return.

What If My Household Income or Household Size Changes And I Receive Too Much or Too Little Advance Premium Tax Credit?

There are times when your household income and/or household size will change during the year. You should report life changes to the Marketplace as they happen. If you receive advance premium tax credits, the credits must be reconciled when you file your federal income tax return. Therefore, any advance premium tax credits received in 2016 must be reconciled when you file your 2016 federal income tax return in year 2017.

If your household income decreases, you may be able to claim a refundable premium tax credit. If your household income increases, you may have to pay back some or all of the advance premium tax credits that were paid to the insurance company on your behalf. However, there may be a limit on the amount that you will have to pay back. This repayment amount is based on your household income percentage of the federal poverty level and will not be greater than $1,275 if you file your tax return as single or $2,550 for any other filing status as long as your household income is LESS THAN 400% of the federal poverty level. See table below for MAXIMIUM repayment amounts:

Maximum Amount of Tax Year 2016 Advance Premium Tax Credit That Individuals and Families Must Pay Back
If Household Income Percentage of Federal Poverty Level is AT LEAST: Single Taxpayers Repayment Amount Married (Jointly or Separately), Head of Household, and Qualifying Widow(er) Taxpayers Repayment Amount
1% But Less Than 100% $0 $0
100% But Less Than 200% $300 $600
200% But Less Than 300% $750 $1,500
300% But Less Than 400% $1,275 $2,550
400% or Higher FULL Amount FULL Amount

Cost-Sharing Subsidy

In addition to a premium tax credit, those making between 100% and 250% of the FPL, may be eligible for a "cost-sharing" subsidy to reduce out-of-pocket costs, such as co-payments, co-insurance and deductibles.

In order to qualify for the cost-sharing subsidy, individuals MUST meet the following three criteria:

  1. The individual must qualify for the premium tax credit.

  2. The individual must purchase a silver-level qualified health plan through the Marketplace or state exchange.

  3. The individual must have household income between 100% and 250% of the FPL.

The cost-sharing subsidy is NOT a tax credit and does not get reconciled on your federal income tax return. No repayment is required. The subsidy is paid by the U.S. Department of Health and Human Services (HHS).


Click here to Return to Affordable Care Act Home Page