Premium Tax Credit (Form 8962)

The Premium Tax Credit (PTC) is a refundable tax credit that helps eligible individuals and families pay for health insurance purchased through the Health Insurance Marketplace. If you're eligible, the credit can lower the amount you pay for monthly premiums or increase your refund when you file your tax return.

Who Qualifies for the Premium Tax Credit?

You may qualify for the Premium Tax Credit if you meet all of the following requirements:

Your household income falls within the eligibility guidelines.
You do not file your tax return using the Married Filing Separately (MFS) status.
- There is a limited exception for certain taxpayers who are victims of domestic abuse or spousal abandonment.
You cannot be claimed as a dependent on someone else's tax return.
For the months you claim the credit, you or a member of your tax family:
- Had health insurance through the Health Insurance Marketplace.
- Were not eligible for affordable employer-sponsored health coverage that provides minimum value.
- Were not eligible for government-sponsored coverage such as Medicaid, Medicare, CHIP, or TRICARE.
- Paid the portion of the insurance premium not covered by Advance Premium Tax Credit (APTC) payments.

Employer Coverage Affordability Rules

For tax years 2023 and later, eligibility rules for family members were updated.

When determining Premium Tax Credit eligibility for a spouse or dependent who can enroll in an employer's health plan, affordability is based on the cost of coverage for the employee and the family members seeking coverage, not the cost of employee-only coverage.

This change may allow some spouses and dependents to qualify for Marketplace coverage and the Premium Tax Credit even when the employee's individual coverage is considered affordable.

Income Limits for Tax Years 2023 Through 2026

For tax years 2023 through 2026, taxpayers with household income above 400% of the Federal Poverty Line (FPL) may still qualify for the Premium Tax Credit. Eligibility is based on the percentage of household income expected to be contributed toward health insurance premiums rather than a strict income cutoff.

Because eligibility can vary based on income, family size, and Marketplace premiums, it's important to enter your information accurately when preparing your return.

Additional Information

If you received Marketplace coverage or need to make updates related to the Premium Tax Credit, the following articles may help:

How do I enter my 1095-A?
How can I edit my Form 8962?
I am a dependent on another person's return. How do I answer the health insurance question?
How to report a shared policy allocation for Married Filing Separately on Form 8962
How do I report shared allocation policy amounts when I am divorced?

What You'll Need to Claim the PTC

Most taxpayers claiming the Premium Tax Credit will need:

Form 1095-A, Health Insurance Marketplace Statement
Information about household income and family members
Form 8962, Premium Tax Credit, which is used to calculate the credit and reconcile any advance payments received during the year

If you received advance premium tax credit payments during the year, filing Form 8962 is generally required to reconcile those payments with the amount of credit you are actually entitled to receive.

Key Takeaway

The Premium Tax Credit can make Marketplace health insurance more affordable for eligible taxpayers. If you purchased coverage through the Marketplace, review your eligibility carefully and make sure your Form 1095-A information is entered correctly to avoid delays in processing your return or refund.