The Advance Premium Tax Credit (APTC) is a health insurance subsidy that helps eligible taxpayers lower their monthly Marketplace health insurance premiums. Instead of waiting until you file your tax return to receive the benefit, you can choose to have all or part of the credit paid directly to your insurance company throughout the year.
If you purchase health insurance through HealthCare.gov or a state Health Insurance Marketplace, the Marketplace will estimate your Premium Tax Credit based on information such as:
- Household income
- Family size
- Filing status
- The cost of available health insurance plans in your area
The estimated credit can then be used to reduce your monthly premium payments.
How Does the Advance Premium Tax Credit Work?
When you enroll in Marketplace coverage, you estimate your expected household income for the year.
If you're eligible for the Premium Tax Credit, you can choose to:
- Receive the credit in advance throughout the year to lower your monthly premiums, or
- Wait and claim the entire Premium Tax Credit when you file your federal tax return.
If you receive the credit in advance, the Marketplace sends the payment directly to your health insurance provider each month on your behalf.
What Happens When I File My Tax Return?
At the end of the year, you must compare the Advance Premium Tax Credit you received to the actual Premium Tax Credit you're entitled to based on your final household income.
This process is called reconciling the Premium Tax Credit and is completed on Form 8962, Premium Tax Credit.
If You Received Too Much Advance Credit
If your actual household income is higher than the income you reported to the Marketplace, you may have received more Advance Premium Tax Credit than you were entitled to receive.
In that case, you may have to repay some or all of the excess credit when you file your tax return.
If You Received Too Little Advance Credit
If your actual household income is lower than expected, you may qualify for a larger Premium Tax Credit than you received during the year.
In that situation, you may receive the difference as an additional credit on your tax return, which can increase your refund or reduce the amount of tax you owe.
How Do I Know If I Received Advance Premium Tax Credit?
If you purchased Marketplace health insurance and received financial assistance with your monthly premiums, you likely received Advance Premium Tax Credit payments.
You can verify this on Form 1095-A, Health Insurance Marketplace Statement.
Review:
- Column A for monthly premiums.
- Column B for the Second Lowest Cost Silver Plan (SLCSP).
- Column C for Advance Premium Tax Credit payments.
If amounts appear in Column C, Advance Premium Tax Credit payments were made on your behalf.
How Do I Enter Form 1095-A in the Program?
If you received Form 1095-A, follow these steps:
- Select Health Insurance from the left-side menu.
- Answer Yes when asked if you, your spouse, or a dependent had insurance through the Affordable Care Act Marketplace.
- Answer Yes when asked whether you purchased insurance through HealthCare.gov or a state Marketplace.
- Verify all household members covered under the policy.
- Enter the information exactly as shown on Form 1095-A.
- Complete any questions regarding Premium Tax Credit repayment, shared policy allocations, or coverage changes during the year.
The program will automatically complete Form 8962 and calculate whether you're entitled to an additional credit or must repay excess Advance Premium Tax Credit payments.
What If My Income Changed During the Year?
It's important to report changes in income, family size, marital status, or other household information to the Marketplace as soon as they occur.
Updating your Marketplace application during the year can help prevent large differences between the Advance Premium Tax Credit you received and the amount you're actually entitled to claim.
Common changes that should be reported include:
- Marriage or divorce
- Birth or adoption of a child
- Changes in employment
- Significant increases or decreases in income
- A dependent moving into or out of your household
2026 Tax Year Guidance
For tax year 2026 returns filed in 2027, taxpayers who received Marketplace coverage and Advance Premium Tax Credit payments must enter their Form 1095-A information and complete Form 8962.
You should not file your return until you receive Form 1095-A from the Marketplace. Filing without the form may delay processing of your return and could require corrections later.
Also note that eligibility for the Premium Tax Credit is no longer strictly limited to taxpayers with household income between 100% and 400% of the Federal Poverty Level. Depending on current law and your circumstances, you may still qualify for Premium Tax Credit benefits even if your income exceeds 400% of the Federal Poverty Level.
Key Takeaway
The Advance Premium Tax Credit (APTC) helps reduce your monthly Marketplace health insurance premiums by providing part of your Premium Tax Credit in advance. When you file your tax return, you'll reconcile the advance payments using Form 1095-A and Form 8962. If you received too much credit, you may need to repay a portion of it. If you received too little, you may qualify for an additional tax benefit. Keeping your Marketplace information up to date throughout the year can help avoid surprises at tax time.