What You Need to Know About the 2016 ACA Tax Credits

If you have health insurance thorough the Affordable Care Act you may be eligible for a tax credit or subsidy to offset the financial strain. You can choose to have none, all or some of your premium tax credit paid in advance, which serves to lower your monthly health insurance payments. The amount of subsidy you receive will depend on your income, age and will be an estimate based on the current marketplace rates. 

Repayment Limitations Based on Income
When you purchase health insurance and elect to take your subsidy, you’ll have to keep the government informed regarding important life changes like a change in income. If your income changes it’s more then likely the subsidy you qualify for will also change. If you receive an excess subsidy, you will likely be responsible for repaying the difference. However, the amount you repay will depend on your filing status and income.

Reconciling the Tax Credit
At the end of the year, you may receive a Health Insurance Marketplace Statement form 1095-A. You will use this form to file your income tax return with the IRS. This is how the IRS will confirm that amount of subsidy you received matches your income and what you qualify for. 

You must file Form 1095-A with the IRS if:

• You claim the health insurance tax credit
• Advance payments were given to an individual with the intention of filing a personal exemption, but the exemption is not claimed
• Advance payments were given directly to an insurance agency on your behalf or the behalf of someone in your tax family

If you received less or more than the subsidy you’re entitled to, this amount will be reflected in your refund or amount owed. 

For more information about the premium tax credit, contact Sackett & Associates Insurance Services at (707) 823-3689. You can also like us on Facebook or follow us on Twitter!