Knowledge Base

13994: Premium Tax Credit FAQs (ACA)


Where can I find some basic facts about the Premium Tax Credit (PTC) of the Affordable Care Act (ACA)?

IRS provides a site with general facts about the Premium Tax Credit (PTC), including a definition of the PTC, information about advance payments, and how to reach the Marketplace:  Questions and Answers on the Premium Tax Credit (PTC).

 Topics include:

  • The Basics
  • Eligibility
  • Computing the Amount
  • Reporting, Claiming, and Reconciling

There are also links to:

  • Publication 5120: Your Credit, Your Choice - Pub 5120
  • Publication 5152: Reporting Changes to the Marketplace -Pub 5152

What is the maximum Premium Tax Credit a person can get?  

The Premium Tax Credit (PTC) is essentially the amount by which a stated percentage of the taxpayer's household income exceeds the premium cost of the second lowest cost Silver Level Coverage plan available to a taxpayer on an exchange. The taxpayer's actual credit is the lesser of the PTC and the taxpayer's premium from Form 1095-A, Health Insurance Marketplace Statement.

The PTC calculation can be followed on Form 8962, Premium Tax Credit (PTC). Shown below is an illustrative summary of Table 2 from the Instructions for Form 8962, which is used in the calculation. For the exact percentage, see those instructions.

Household Income as a Percentage of Federal Poverty Level 8862, line 7, Applicable Figure
(Percentage of Household Income
defining taxpayer's annual health care contribution)
Less than 133% 2%
At least 133% but < 150% 3% - 4%
At least 150% but < 200% 4.05% - 6.30%
At least 200% but < 250% 6.34% - 8.05%
At least 250% but < 300% 8.08% - 9.50%
At least 300% but less than 400% 9.50%

The basic calculation of a taxpayer's PTC on Form 8962 works something like this:  

Applicable figure (from Table 2 in the 8962 instructions) 
 X household income 
 = annual contribution amount
  cost of 2nd lowest Silver Level Coverage plan 
- annual contribution amount
 = annual maximum premium assistance (the annual maximum PTC)

The allowable PTC is the lesser of the maximum premium assistance and the actual premium amount from Form 1095-A.

In Drake Tax you can see the household income amount on the "Household Income Worksheet" section of worksheet Wks 89652. It also provides a section for the dependents' income at "Dependents' Combined Modified AGI Worksheet - Line 2b". Wks TTLGI lists all sources of gross income involved for the taxpayer(s).

The Marketplace assessment said I was ineligible for Medicaid or CHIP. I enrolled in a plan that provided the Advanced Premium Tax Credit (APTC) based on that determination. Subsequently, I was deemed eligible for Medicaid. I was enrolled with Medicaid for several months while I had a qualified health plan from the Marketplace. Does that make me ineligible for the PTC for the months I was enrolled in both? 

According to FAQ #30 from the Affordable Care Act Topics on the IRS website:

Generally, no. If a Marketplace makes a determination or assessment that an individual is ineligible for Medicaid or CHIP and eligible for APTC when the individual enrolls in a qualified health plan, the individual is treated as not eligible for Medicaid or CHIP for purposes of the premium tax credit for the duration of the period of coverage under the qualified health plan (generally, the rest of the plan year).

Accordingly, if you were enrolled in both Medicaid coverage and in a qualified health plan for which advance credit payments were made for one or more months of the year following a Marketplace determination or assessment that you were ineligible for Medicaid, you can claim the premium tax credit for these months, if you are otherwise eligible.

The Marketplace may periodically check state Medicaid data to identify consumers who may be dual-enrolled, and direct them to return to the Marketplace to discontinue their APTC.

If you believe that you may currently be enrolled in both Medicaid and a qualified health plan with advance credit payments, you should contact the Marketplace immediately.

For more information please see the following IRS website:  Questions and Answers on the Premium Tax Credit (PTC)

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