Moderate income families understand that health insurance premiums can be expensive, but there are helpful tax credits that can offset some of the costs associated with them. In order for these credits to be claimed at tax time there are three requirements.
You must receive your coverage through the Health Insurance Marketplace. Plans can be chosen during the open enrollment period between November 15, 2014 and February 15, 2015.
Total household income needs to fall between a thresholds of one to four times the federally set poverty line. This base incomes is considered to be $23,850 to $94,400 annually for a four person family for the 2014 tax year.
Qualifying for a plan through other avenues such as Medicaid, Medicare, employer-sponsored coverage among other coverages will render to unable to receive the credit.
During enrollment through the Health Insurance Market place you may receive notification that you may qualify for a premium tax credit. You have two different options to choose from if this occurs. You can either choose to apply an estimated credit directly to your health insurance premium, this will lower your out of pocket costs throughout the year of 2015, or you can opt to receive a credit when you file your 2016 tax return.
If you decide to receive a credit at tax time in 2016 you may have a change in your taxable income. You could see a decrease in the amount of tax you owe or an increase is any refund received.
Changes in your income or the families filing status could alter the amount you qualify for if you decide to take a credit for your monthly premiums. If you do receive a credit and it does not match what is filed on your tax return in 2016 you will be liable to pay any excess money paid towards the premium. If you happen to overpay for your premium you will see a refund of the overpayment at tax time. Because of the nature of credits and deductions it is best to make sure you keep your information updated with the Marketplace and inform them of any changes in 2015, so that you receive the correct credit amount.