The Premium Tax Credit is a refundable tax credit designed to assist eligible people with moderate incomes afford health insurance purchased through the Health Insurance Marketplace. In California the agency is known as “Covered California.”
Eligible taxpayers may choose to have the credit (all of part of it) paid directly to their insurance company to lower the monthly premiums for their health insurance. Alternatively, you can receive the full benefit of the premium assistance when you file your tax return–as a refundable credit.
The advance credit payments made to the insurance company are based on the estimate of the credit that can be claim for the year on the federal tax return. The estimate is based on size of family, projected income, and other factors. The IRS has issued an important reminder that the taxpayer must reported any changes in status to the Marketplace so as to avoid having too much or too little premium assistance paid to reduce the monthly health insurance premiums.
Life changes that need to be reported include:
- Births or adoptions.
- Marriage or divorce.
- Change of address.
- Change in household income.
- Incarceration or release from incarceration.
- Gaining or losing health care coverage or eligibility.
- Changes affecting income and household size.
These changes may also permit you to sign up for coverage within 60 days of the event in a special enrollment. A wealth of information is to you available at www.HealthCare.gov and at www.coveredca.com.