What's the Advance Premium Tax Credit and How Does It Work?

Because of the Affordable Care Act, many people who buy their own health insurance can get financial assistance that lowers their costs. This assistance is called a subsidy. There are two kinds of subsidies: the advance premium tax credit and cost sharing reduction.

The advance premium tax credit goes toward your health insurance premium — what you pay each month to maintain your health coverage.

You can apply the tax credit to Blue Cross Blue Shield of Michgan's bronze, silver, gold and catastrophic plans. Here's what else you need to know about the premium tax credit.

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If you can answer yes to all these questions, you may be eligible for the premium tax credit.

  • My household income is 100 to 400% above the Federal Poverty Level—most people in this range will be eligible, but not everyone
  • My employer doesn't offer health insurance that costs less than 9.5% of my income and pays at least 60% of covered benefits
  • I'm not eligible for health insurance through a government program like Medicaid or Medicare
  • I'm married and file a joint return
  • I'm not claimed as a dependent by another person

Not everyone with an income under 400% of the Federal Poverty Level will qualify for a premium tax credit. That's because it's based on your income relative to:

  • The cost of the second lowest-priced silver plan in your county
  • The size of your family and the age of family members

Here's an example. Two couples living in the same county both have an income that is 375% above the Federal Poverty Level. One couple is in their 30s, the other couple is in their 50s. Because older people pay higher premiums, the older couple may qualify for a tax credit. The younger couple may not, even though their income is the same.

If you can answer yes to all these questions, you may be eligible for the premium tax credit.

  • My household income is 100 to 400% above the Federal Poverty Level—most people in this range will be eligible, but not everyone
  • My employer doesn't offer health insurance that costs less than 9.5% of my income and pays at least 60% of covered benefits
  • I'm not eligible for health insurance through a government program like Medicaid or Medicare
  • I'm married and file a joint return
  • I'm not claimed as a dependent by another person

Not everyone with an income under 400% of the Federal Poverty Level will qualify for a premium tax credit. That's because it's based on your income relative to:

  • The cost of the second lowest-priced silver plan in your county
  • The size of your family and the age of family members

Here's an example. Two couples living in the same county both have an income that is 375% above the Federal Poverty Level. One couple is in their 30s, the other couple is in their 50s. Because older people pay higher premiums, the older couple may qualify for a tax credit. The younger couple may not, even though their income is the same.

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