Am I eligible for the Advanced Premium Tax Credit?

Posted on Nov 25, 2012

Starting in 2014 you may be eligible for the “Advanced Premium Tax Credit” (which was created as part of the Affordable Care Act). If youare eligible, this could substantially reduce the cost of your Colorado health insurance plan. In order to determine your eligibility for these tax credits, consider these questions:

1. Are you eligible for health insurance through your employer?

If you are eligible for group health insurance, then you are likely not eligible for the premium tax credit UNLESS the coverage offered by your employer is unaffordable (costs more than 9.5% of your income) OR the coverage is inadequate (covers less than 60% of medical costs).

2. Are you eligible for health insurance through another government program?

If so, then you are likely not eligible for the premium tax credit.

3. Are you a lawful citizen of the United States?

You must be a lawful citizen of the United States to be eligible for the premium tax credit. Illegal immigrants are not eligible for these credits.

4. Do you file your taxes?

To claim the Advanced Premium Tax Credit, you need to be an “applicable tax payer”and NOT be claimed as a dependent on anyone else’s tax return. The applicable taxpayer’s family, which is also covered by the tax credit, includes all persons that the taxpayer claims a dependent tax deduction.

5. Are you incarcerated (in jail or in prison)?

If you are currently incarcerated (other than if you are awaiting disposition of charges) then you are not eligible to claim the advanced premium tax credit since your health care is already provided for by the facility that you are incarcerated in.

6. Is your modified adjusted gross household income (MAGI) between 133% and 400% of the federal poverty level?

For 2012, this means less than $44,680 for a single person and less than $92,200 for a family of four. If you’re income is greater than these levels, you will not be eligible for the premium tax credit. If your income is lower than that you will likely be eligible for other government health care options.

Again, these tax credits will be available starting January 1st of 2014 for insurance plans purchased through the Colorado Health Insurance Exchange or other state health insurance exchanges. The average tax credit for eligible taxpayers is expected to exceed $4600 per year. These tax credits are also advanceable, meaning that you can start taking advantage of them as soon as you enroll in a qualifying health insurance plan in 2014. The initial credit will be calculated based upon your projected income, but will be trued up when you file your 2014 tax return (in the spring of 2015). That being so, it is important that you conservatively estimate your income so that you are not hit with a substantially lower tax credit which would mean that you would owe substantially more in taxes.

If you have any questions, please give us a call at 970.484.1250. Sage Benefit Advisors will be able to assist with health insurance offered through the Colorado Health Insurance Exchange. These services and our advice are are available at no additional cost to you.

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