QUESTION

When are you not eligible for premium tax credits?

Individuals with no coverage | Eligibility for Premium Tax Credits and Cost-Sharing Reductions
ANSWER

To qualify for premium tax credits, you must enroll in a plan through the health insurance marketplace and you must have projected annual household income between 100 and 400 percent of the federal poverty level. However, the American Rescue Plan Act of 2021 eliminates the limit on incomes eligible for premium tax credits in plan years 2021 and 2022. In addition, if you are eligible for any of the following types of coverage, you would be ineligible for premium tax credits through the marketplace:

  • Employer-sponsored coverage, unless the coverage is unaffordable (your required contribution to the premium for self-only coverage costs more than 9.61 percent of household income in 2022; for 2021 it was 9.83 percent) or does not meet a minimum value (the plan must cover at least 60 percent of the cost of covered services for a standard population, and it must include substantial coverage of physician and inpatient hospital services); and
  • Government-sponsored coverage, including Medicare Part A coverage, Medicare Advantage plans, most Medicaid coverage and the Children’s Health Insurance Program coverage, veterans health coverage and TRICARE (coverage for members of the military).

There may be other types of coverage for which eligibility alone would not disqualify you from premium tax credits. For example, if you are eligible for COBRA or a former employer’s retiree plan, but do not enroll, you may qualify for premium tax credits.

(26 C.F.R. § 1.36B-2; 26 C.F.R. § 1.36B-6; IRS Rev. Proc. 2021-36)

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