Tax Credit

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Advance Premium Tax Credit – It is possible to get tax credits that will help you to lower the amount of money that you have to pay on your monthly premium. These are called advance premium tax credits, or APTCs. The only way that you can get this credit if you live in a state that runs its own exchange and choose a plan through that state.

How Can You Use the Tax Credit? – You will have three options when you are using the APTC. You can choose to use all of the tax credit, some of it, or none of it. Let’s look at what each of these options will entail.

If you decide to use all of the tax credit, it means you will pay the lowest possible amount on your monthly premiums. If you end up earning more than you stated on your application though, you will need to pay back the difference at the end of the year when you file your income tax return.

Those who choose to use some of their tax credits will have their monthly premiums lowered somewhat. However, there is a lower chance that you will have to pay money to the government at the end of the year.

Finally, you could choose to use none of the tax credit on your monthly payments. You will pay the full cost of the insurance each month, and this will eliminate the possibility of having to pay back the government at the end of the year. Since you qualified for the credits though, you can apply them at the end of the year to your taxes, which can actually help you lower the amount you pay in taxes. If you do not owe any taxes, it could increase the amount of your return.

If you apply for advance premium tax credits and are approved, the amount of tax credit you can apply to the premium needs to be less than the amount of the monthly premium. This means that your credits can’t exceed the premium cost, so you have to be careful while you are shopping for a plan. You want to choose one that is less than or equal to what your advance premium tax credit will cover.

If you have extra tax credits, you could use those toward a pediatric dental plan for those in the family who are under 19 years old.

Who Can Qualify for a Tax Credit?

To qualify for an APTC, you will need to meet certain income requirements. You can generally receive credits if your home’s income is up to 400% of the federal poverty level. A family of four could qualify for a tax credit if the household brought in up to $95,000 per year. The actual amount of the tax credit for which you could qualify will vary based on the number of people in the household and the overall income.

Keep in mind that you need to file your tax return for any year where you want to use tax credits. The only exception to this is that you can get a tax credit if you haven’t filed taxes in the past. Going forward though, you would need to file your taxes, or else you will be denied the credits.

The tax credits can do a great job of reducing the amount of money that you have to pay for your health coverage. This makes it more affordable than ever to get your insurance.

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