FAQs on the Premium Tax Credit

If you purchased health insurance through a government exchange, you may be eligible for the premium tax credit. In fact, you may even have received it on an advance basis to help pay premiums monthly. The credit isn’t new; it was created by the Affordable Care Act in 2010. However, changes due to COVID-19 impact some of the rules. The IRS has issued FAQs on the premium tax credit to explain eligibility for the credit (Fact Sheet FS-2022-13, updated the FAQs).

For 2021, you are eligible for the credit if household income falls within a certain range or you or your spouse (if filing jointly) received or were approved to receive unemployment benefits for any week during that year and meet certain other requirements. Usually, eligibility means having household income at least 100% but no more than 400% of the federal poverty line for your family size. Household income includes unemployment benefits in 2021. For 2021, if you or your spouse (if filing a joint return), received, or was approved to receive, unemployment compensation for any week beginning during 2021, the amount of your household income is considered to be no greater than 133% of the federal poverty line for your family size and you are considered to have met the household income requirements for being allowed a premium tax credit.

What’s more, for tax years 2021 and 2022, the American Rescue Plan Act of 2021 temporarily expanded eligibility for the premium tax credit by eliminating the requirement that a taxpayer’s household income may not be more than 400% of the federal poverty line. Under this rule, those with household income of more than 400% of the federal poverty line for their family size can claim the premium tax credit, if otherwise eligible.