In most cases, taxpayers must have household income at or above 100% of the Federal Poverty Line (FPL) to qualify for the Premium Tax Credit (PTC). However, there is a special rule for certain lawfully present immigrants whose income falls below 100% of the FPL.
According to IRS guidance, you may qualify for the Premium Tax Credit even if your household income is less than 100% of the Federal Poverty Line when all of the following conditions are met:
- No one can claim you as a dependent on their tax return.
- You, or a member of your tax family, enrolled in a qualified health plan through the Health Insurance Marketplace.
- The enrolled individual is lawfully present in the United States.
- The enrolled individual is not eligible for Medicaid because of their immigration status.
- You otherwise meet all requirements to be an applicable taxpayer for the Premium Tax Credit, except for the Federal Poverty Line income requirement.
Why Does This Exception Exist?
Some immigrants are lawfully present in the United States but are not eligible for Medicaid due to federal or state eligibility restrictions related to immigration status. Without this exception, these individuals could be ineligible for both Medicaid and the Premium Tax Credit.
To help ensure access to affordable health coverage, the IRS allows certain lawfully present immigrants with income below 100% of the Federal Poverty Line to qualify for the Premium Tax Credit if all eligibility requirements are met.
What Does "Lawfully Present" Mean?
For Premium Tax Credit purposes, "lawfully present" generally includes individuals who have an immigration status recognized by federal law that makes them eligible to enroll in Marketplace coverage.
The Health Insurance Marketplace determines whether an individual is considered lawfully present based on the information provided during enrollment.
What You'll Need
If you qualify for this exception and received Marketplace coverage, be sure to keep:
- Form 1095-A, Health Insurance Marketplace Statement
- Records of household income
- Any Marketplace correspondence regarding eligibility
You'll use the information from Form 1095-A to complete Form 8962, Premium Tax Credit, when filing your federal tax return.
Key Takeaway
Certain lawfully present immigrants may qualify for the Premium Tax Credit even when household income is below 100% of the Federal Poverty Line. To qualify, the enrolled individual must have Marketplace coverage, be lawfully present in the United States, be ineligible for Medicaid because of immigration status, and meet all other Premium Tax Credit requirements.