The Affordable Care Act (ACA) includes both tax-related and non-tax provisions for health care coverage and financial assistance options that affect individuals, families, businesses, insurers, tax-exempt organizations and government entities. These tax provisions contain important changes, including how individuals and families file their taxes. The law also contains benefits and responsibilities for other organizations and employers. The IRS administers the tax provisions of the law, while Health and Human Services (HHS) is the lead agency for the non-tax provisions.
Premium Tax Credit
If you get insurance coverage through the Health Insurance Marketplace, and not another source like your employer or a government sponsored plan, you may be eligible for a Premium Tax Credit to help you pay for that coverage.
There are two ways to get the credit. If you qualify for advance payments of the premium tax credit (APTC), you can choose to have amounts paid directly to the insurance provider to help cover your monthly premiums. You can also choose to get all of the benefit when you claim the PTC on your tax return.
Premium Tax Credit Change Estimator
Helps you estimate how your premium tax credit will change if your income or family size changes during the year.
Individual Shared Responsibility Provision
Under the Tax Cuts and Jobs Act, passed December 22, 2017, the amount of the individual shared responsibility payment is reduced to zero for months beginning after December 31, 2018.
Beginning in tax year 2019, Form 1040 and Form 1040-SR will not have the “full-year health care coverage or exempt” box and Form 8965, Health Coverage Exemptions, will no longer be used. You need not make a shared responsibility payment or file Form 8965, Health Coverage Exemptions, with your tax return if you don’t have minimum essential coverage for part or all of the year.
Healthcare Information Forms
Because your health coverage can affect your taxes, you may receive informational forms from insurance providers – the Marketplace, your insurer, or your employer. For more information on these forms — who should expect to receive the forms, how they can be used, and how to file with or without the forms — see IRS.gov’s questions and answers and details on IRS Forms 1095-A, 1095-B, and 1095-C.
Premium Tax Credit: Act Now to Keep Getting Advance Payments
To keep getting advance payments of the premium tax credit, self-attest now on your health insurance marketplace website. Log on to your marketplace account and follow instructions there.
If you purchased health insurance coverage through the Marketplace and benefit from advance payments of the premium tax credit, it is important to report certain life events to the Marketplace throughout the year – these events are known as changes in circumstances.
If your household income goes up or the size of your household is smaller than you reported to the Marketplace – for example, because a son or daughter you thought would be your dependent will not be your dependent for the year of coverage – your advance credit payments may be more than the premium tax credit you are allowed for the year. If you report the change, the Marketplace can lower the amount of your advance credit payments. If you don’t report the change and your advance credit payments are more than the premium tax credit you are allowed, you have to reduce your refund or increase the amount of tax you owe by all or a portion of the difference when you file your federal tax return next year.
If your household income goes down or you gain a household member, you could qualify for more advance credit payments. This could lower what you pay in monthly premiums. In addition, reporting your lower household income or new family member could reveal that you qualify for Medicaid or CHIP coverage that is less costly than your Marketplace plan.
Premium Tax Credit Change Estimator
Helps you estimate how your premium tax credit will change if your income or family size changes during the year.
Claiming and Reconciling Premium Tax Credit
If you purchased coverage through the Health Insurance Marketplace, you may be eligible for the premium tax credit. The Health Insurance Marketplace provides an estimate of the amount of the premium credit you will be allowed for that year based on information you provide about your family composition, your household income, and whether or not anyone you are enrolling are eligible for other non-Marketplace coverage. Based on the estimate from the Marketplace, you can choose to have all. Some, or none of your estimated credit paid in advance directly to your insurance company on your behalf. These are called advanced payments of the premium tax credit or advance credit payments.
Note: If you have excess advance payments of the premium tax credit for 2020 (excess APTC), you are not required to report excess APTC on your 2020 tax return or file Form 8962, Premium Tax Credit. Excess payments are the amounts by which your advance credit payments for the year of coverage exceeded the premium tax credit you are allowed for the year.
For years other than 2020, if advance payments of the premium tax credit were paid for you or someone else on your tax return, you must complete and file Form 8962 and attach it to your return.
If advance credit payments are made for you or an individual in your tax family for coverage in a year other than 2020, and you do not file a tax return, you may not be eligible for advance credit payments in future years. This means you will be responsible for the full cost of your monthly premiums. In addition, you may have to pay back some or all of the advance credit payments made on behalf of you or an individual in your tax family.
If you already filed a 2020 return and reported excess APTC or made an excess APTC repayment, you don’t need to file an amended return or take any other action.
Report changes in circumstances. For the full list of changes you should report, visit HealthCare.gov
