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No Change to Affordable Care Act Credit

13 Jul Posted by in Newsletters | Comments
No Change to Affordable Care Act Credit
 

Obamacare Scotus decisionIn June, the U.S. Supreme Court decided the fate of the premium tax credit under the Affordable Care Act. The Court ruled that the credit applies to health insurance exchanges established by individual states as well as exchanges established by the federal government.

What does that mean for you? Essentially, the decision means that nothing has changed. If you qualify for the health insurance premium tax credit, you will continue to be able to claim it on your federal income tax return.

The premium tax credit is an advanceable, refundable credit that helps offset the cost of health insurance policy premiums when your income is within established ranges. The determination of your eligibility to receive the credit, and the amount you qualify for, is calculated when you complete your insurance application on an exchange.

You choose how much of the credit to apply to your premium. If you elect to use some or all of the credit to offset the premium, that amount is paid directly to the insurance company. You pay the remaining premium out-of-pocket. When you complete your federal income tax return, you calculate the actual credit you are eligible to receive. The difference between the actual amount and the amount advanced to the insurance company affects the tax on your return.

Because the credit is based on income, any changes in your financial situation during the year can affect the amount you’re eligible to receive. Please call us if you need more information.

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