Premium tax credit, or PTC, is a refundable credit designed to help those who have health insurance through the Health Insurance Marketplace while face difficulty covering the premiums.

In order to be eligible for this credit, you need to meet several requirements, which include:

(1) Your household income falls below a certain threshold. Specifically, it should be no more than 400% of the federal poverty level considering your family size.

(2) You need to file Form 8962, Premium Tax Credit, in a status of Married Filing Jointly or Filing as Independent. Generally you cannot claim as a dependent or by using Married Filing Separately. One exception is that victims of domestic abuse and spousal abandonment could use the filing status Married Filing Separately according to the Income Tax Regulations.

(3) You meet these requirements in the same month:

  • You shall have health insurance coverage through the Health Insurance Marketplace.
  • You can hardly cover the premium of your health insurance through an eligible employer-sponsored plan with minimum value.
  • You do not qualify for coverage through a government program, such as Medicare, Medicaid, TRICARE or CHIP.
  • You shall pay the part of premiums not covered by advance credit payments. (Advance credit payments are amounts paid to your insurance company to cover a share of the premiums for you.)

When you enroll in PTC, the Marketplace will determine whether you qualify for advance credit payments, or advance payments of the PTC. With this eligibility, the out-of-pocket money you have to spend on the health insurance will be further decreased.