With so much news about implementation of the new health care law, a tax credit benefit may be overlooked by some qualified participants. Starting in 2014, if you get your health insurance coverage through the Health Insurance Marketplace, you may be eligible for the Premium Tax Credit. This tax credit can help make purchasing health insurance coverage more affordable for people with moderate incomes. The open enrollment period to purchase health insurance coverage for 2014 through the Marketplace runs from Oct. 1, 2013, through March 31, 2014.
In general, you may be eligible for the credit if you meet all of the following criteria:
· You buy your health insurance through the Marketplace;
· You are ineligible for coverage through an employer or government plan;
· You are within certain income limits;
· You file a joint return, if married; and
· You cannot be claimed as a dependent by another person.
If you are eligible for the credit, you can choose to have some or all of the estimated credit paid in advance directly to your insurance company to lower what you pay out-of-pocket for your monthly premiums during 2014; or wait to get all of the credit when you file your 2014 tax return in 2015.
If you choose to get it now: When you file your 2014 tax return in 2015, you will subtract the total advance payments you received during the year from the amount of the Premium Tax Credit calculated on your tax return. If the Premium Tax Credit computed on the return is more than the advance payments made on your behalf during the year, the difference will increase your refund or lower the amount of tax you owe. If the advance credit payments are more than the Premium Tax Credit, the difference will increase the amount you owe and result in either a smaller refund or a balance due.
If you choose to get it later: You will claim the full amount of the Premium Tax Credit when you file your 2014 tax return in 2015. This will either increase your refund or lower your balance due.
For more information on the requirements for the Health Insurance Marketplace and the offered health plans, coverage options, and financial assistance, see the Department of Health and Human Services website here HealthCare.gov.