Premium Tax Credit Meaning
The premium tax credit whose short form is PTC is actually a refundable tax credit. This helps different households to make up or reduce the monthly premium paid by them after buying a health insurance. The tax is maintained by IRS or Internal Revenue Services. United States is the country where the above mentioned tax is widely used.
The PTC, is calculated by federal government and under their observation it is directly sent to the varied insurance companies. The small earners will receive higher credit and vice versa. PTC is indirectly related to the income of a person. PTC ensures a cut off or a discount in the premiums paid after the purchased health insurance.
Premium Tax Credit Calculator
The PTC payers use a certain form which is Form 8962 which helps to calculate the PTC. After this, PTC is restored back with APTC ( advanced premium tax credit) . Only if the person qualifies for PTC, s/he may completely the Form 8962 after buying health insurance from Health Insurance Marketplace.
If the taxpayer or the family member of that taxpayer gets himself enrolled for health insurance from Health Insurance Market place, s/he will receive a statement. The statement is 1095 A. Then the APTC will pay the provider of health insurance the monthly premium coverage partly. If any APTC was already paid and in order to claim for credit, the taxpayer needs to complete Form 8962.
The calculated PTC less than APTC, the consequence will be, the taxpayer will be paying the excess. For the either case, the taxpayer will receive the extra amount.
Premium Tax Credit Health Insurance
One of the best financial cushion provided by tax credit is the PTC. Any insurance bought from Health Insurance Exchange by moderate income group gets the help of PTC on premiums. The main amount of tax credit qualified depends upon the family size largely. If wanted, one can receive the tax credit well in advance, by sending almost all the money to the health insurance company which instead will decrease the bills monthly. The payer can pay the total premium at the very one go and then enjoy the tax credit with income tax.
Premium Tax Credit Repayment Exceptions
For exempting the repayment of PTC, the marketplace needs to get updated by the tax payer about the life changes happening. A change in the life includes many things,
The very first one is marriage or getting divorced. The next one after this is giving birth to baby or taking up a baby as adopted one.
The one which follows after the above two is, when the child of the payer reaches the age of 26, s/he remains no longer dependent on his/her parents. The fourth one, is that if someone of the household faces death.
The fifth that follows, whether there has been any income and address changes of the tax payer.
Premium Tax Credit Instructions
The instructions under which one is eligible for PTC are as follows, The basic first one is that, the month of the calendar year in which the taxpayer or any other member of that family has opted health insurance from the Exchange that encloses the registered trademark under the department of health and in that particular year, s/he must not have any other aid from any of the employer sponsored medical fund.
The premiums under PTC, in the month said before, should not get delayed to pay. The payment for that month must be paid within the mentioned due date. The payments can be granted by advance credit payments or by anyone else. The third one is that, the payer needs to remain within the limited income under which this PTC is granted.
Fourthly and the last one, the person must not married filing separately and also the tax payer will have to be dependent upon himself.
Premium Tax Credit Affordable Care Act
The affordable care act provides with premium tax credit because the ACA (Affordable Care Act) wants in itself that all the Americans should have themselves enrolled with their own health services via health insurance. Under ACA, the marketplace from where one has bought it’s health insurance will be discovering the amount of discount over premiums from a sliding scale which in alternate depends upon
the value of your income.
When the income of the taxpayer falls below the federal poverty line, that person gets himself assured of the PTC under Affordable Care Act.
Thus, my dear reader, if you are serious about your and your family’s health, then please ensure that you are having yourself enrolled under any health insurance offered by the Marketplace. Follow the mentioned guidelines in the above article and help your own health!
Source: Premium Tax Credit