QUESTION

Should I use all of my advance premium tax credit toward my monthly premium, or should I consider saving some of it to receive on my tax return next year?

Individuals with coverage | Individual and Marketplace Health Coverage
ANSWER

Subsidies are calculated based on the price of available plans and household income; lower income individuals are eligible for greater subsidy amounts, and some higher income individuals may not receive subsidies. APTCs lower the cost of monthly health insurance premiums by covering a portion of the cost for consumers depending on their income level and household size. Consumers are able to choose to use all, part, or none of their APTC to help pay for the cost of their monthly health insurance premium. The choice on how much of your APTC you should use depends on the risk you want to take in owing money back at the end of the year, and how much you are able to pay for your portion of the monthly premium. The advantage of taking less up front is that it reduces the risk you’d have to pay anything back during tax reconciliation if you mis-estimate your income for the year. You could also get any APTCs you’re still owed. The disadvantage is that taking less than you’re eligible for may make it harder to pay your monthly premium.

In general, you must file your tax return AND reconcile your premium tax credits using Form 8962 for every year you received premium tax credits. If you do not, the marketplace may discontinue premium tax credits for future coverage. However, due to the impact of the COVID-19 pandemic, for plan years 2021 and 2022, you will not lose eligibility for premium tax credits if you did not reconcile your prior year's premium tax credits.

However, HealthCare.gov still includes a section on the application requiring you to attest to having filed and reconciled premium tax credits for past years because the requirement to file and reconcile 2019 premium tax credits is still in place. Failure to check this attestation box could result in losing your eligibility for premium tax credits, even if you know you won't be able to reconcile premium tax credits for 2020. Therefore, when you apply for coverage you should check this box, even if you did not file taxes or reconcile premium tax credits for 2020, 2021, or 2022.

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