Q. If I qualify for a premium tax credit and choose not to take all of it when I enroll in a marketplace plan, can I receive the part I did not take when I do my taxes next year as long as my income is in line with the amount I estimated when I enrolled?
A. If you buy a health plan on the health insurance marketplace and your income is between 100 and 400 percent of the federal poverty level (currently $11,490 to $45,960 for an individual), you may qualify for a tax credit to reduce the cost of your premium. You can elect to take some or all of the credit up front and pay a lower premium during the year, or wait until tax time next year and receive some or all of your credit then. It’s up to you.
Some experts say it may be a good idea not to take the entire amount of the credit up front. If you end up making more money than you estimated, you may have to pay some of the subsidy back at tax time. (Likewise, if your income is lower than expected you could get a bigger credit.)
Eligibility for the tax credit doesn’t depend on whether or not you actually owe any income tax. “Even if your income is low enough or you don’t otherwise owe taxes, you can still get the credit,” says Jennifer Tolbert, director of state health reform at the Kaiser Family Foundation. (KHN is an editorially independent program of the foundation.)
Tax credits are only available for marketplace plans, however. If you decide to buy a plan that’s not offered there, you can’t get a subsidy to reduce your premium.
Kaiser Health News is an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communications organization not affiliated with Kaiser Permanente.