Are you eligible for a health insurance tax credit (subsidy)?
Eligibility depends on your annual household income and how many people are in your family.
If you make up to four times the federal poverty level, you probably qualify for a tax credit.
- For an individual, that’s about $62,600 (4 x Federal Poverty Level, or $15,650).
- For a family of four, that’s about $128,600 (4 x FPL, or $32,150).
How to make sure your health insurance tax credit (subsidy) is accurate
Important
It’s important to update your income and household information annually, so your tax credit is calculated correctly for the next plan year.
This ensures:
- You get the maximum savings you’re eligible for.
- You avoid having to repay all or some of your tax credit.
Dates to know
The Open Enrollment Period is Nov. 1 – Jan. 15 every year. This is when you can enroll in a new plan or renew your coverage. It’s also the perfect time to update your income and household information!
- If you enroll by Dec. 15, coverage begins Jan. 1
- If you enroll between Dec. 16 – Jan. 15, coverage begins Feb. 1
Choose your plan and enroll
When you enroll in your individual and family health plan, you will be notified if you qualify for a tax credit.
Iowa and South Dakota residents can enroll in or renew their ACA health insurance plans during the annual Open Enrollment Period.
Each year, during Open Enrollment, it’s a good idea to update your expected income and household information on your application. That way, you get the right amount of savings.
One individual and family plan tax credit option is the Advanced Premium Tax Credit (APTC). This credit lowers the monthly premium you pay to your insurance company. If you qualify for the APTC, you can have all or some of the credit paid in advance to help with premium costs. Or you can wait until you file your tax return to claim all or some of your APTC on your taxes.
It’s important to accurately report your annual income when enrolling in your individual and family plan. That’s how tax credits are determined. If you under-report your income, you could end up having to pay back all or a portion of your tax credit.
Each year, during Open Enrollment, it’s a good idea to update your expected income and household information on your tax credit application. You may qualify for a higher tax credit, your tax credit may be lower, or in some cases, you may no longer be eligible for a tax credit.
If you don’t provide updated information, your tax credit will be calculated based on your most recent application or IRS information, which could mean you’re not getting all the savings you qualify for. Additionally, a change in plan premiums could impact your tax credit amount. So, even if your expected income and household information is the same, your tax credit amounts could change.
Update your personal information by Dec. 15 each year to ensure you get the right amount of savings.
If you have changes to your income or household information outside of Open Enrollment, you can change your information any time to get updated savings amounts.
Note: Household information includes anyone in your house you file your taxes with – like your spouse – or anyone you claim as a dependent – like your child.
Keep your tax credit for the next plan year
Changes to your income, household or plan premiums may impact your tax credit amount. To continue receiving the tax credit you qualify for, review and update your expected income and household information every year. Even if nothing has changed.
Not updating expected income and household information on your tax application each year could result in:
- Losing your tax credit until your information is current.
- Missing savings you qualify for.
- Having to repay all or some of your tax credit when you file your taxes.
If you are self-employed, you may qualify for a health care tax credit. To see if you qualify, you need to estimate your net income from self-employment, or your profit.
- If your self-employment income is higher than your business expenses, you report this as net income.
- If your business expenses are higher than your income, you report a net loss.
Your net income from self-employment is what you report on Schedule C of your federal tax return. If your business circumstances change, increasing or decreasing your annual income, make sure to update your income and household information. Your tax credit savings are based on your estimated net income for the year you’re getting coverage, not last year’s income.