Tax Solution Center - Edwin R. Medina, EAAdmitted to Practice before the IRS
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Premium Assistance CreditTax credits will be available for low-income individuals who obtain health insurance coverage with a qualified health plan (QHP) through an “Exchange”.
Applicable Taxpayers – Generally, these are individuals whose household income is at least 100%, but not more than 400% of the federal poverty line and who don't receive health insurance under an employer plan, Medicaid or other acceptable coverage. Based upon the current poverty levels, the credit would phase-out at $45,960 for individuals and $94,200 for a family of four.
Enrollment - Eligible individuals will enroll in a plan offered through an Exchange and report his or her income to the Exchange. Based on the information provided to the Exchange, the individual will receive a premium assistance credit based on income.
Premium Subsidy or 1040 Credit – The credit can be used to:
Failure to Pay the Difference - Individuals who fail to pay all or part of the remaining premium amount will be given a mandatory three-month grace period before an involuntary termination of their participation in the plan.
Eligibility - Eligibility for the premium assistance credit will be based on the individual's income for the tax year ending two years before the enrollment period. (Committee Report) The Secretary of Health and Human Services (HHS Secretary) must establish procedures for determining whether an individual who is applying for coverage in the individual market by a QHP offered through an Exchange, or who is claiming a premium assistance credit or reduced cost-sharing, meets the necessary eligibility requirements.
Amount of Premium Assistance Credit - The credit is based on the taxpayer's household income level relative to the federal poverty line. The calculation is computed on a sliding scale starting at 2.0% of income for taxpayers at or above 100% of the poverty line and phasing out to 9.5% of income for those at 400% of the poverty line. The reference premium will be the second lowest cost silver plan available in the individual market in the rating area in which the taxpayer resides.
Deductibles & Co-payments - The standard out-of-pocket maximum limits will be reduced by: