Definitions And Other Issues
Household Income Below 100% (133% in States That Have Enhanced Medicaid) of the Federal Poverty Line
If the computed Federal poverty level (line 5 of Form 8962) is less than 100%, the taxpayer will still qualify for the PTC if:
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The taxpayer or an individual in the taxpayer’s tax family enrolled in a qualified health plan through a Marketplace;
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The Marketplace estimated at the time of enrollment that the household income would be between 100% and 400% of the Federal poverty line for the taxpayer’s family size for the tax year;
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APTC is paid for the coverage for one or more months during the tax year; and
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The taxpayer otherwise qualifies as an applicable taxpayer (without taking into account the Federal poverty line percentage).
Alien Lawfully Present in the United States
Certain aliens with household income below 100% of the Federal poverty line are not eligible for Medicaid because of their immigration status. Such a taxpayer will qualify for the PTC even if their household income is less than 100% of the Federal poverty level if all of the following requirements are met.
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The taxpayer or an individual in the taxpayer’s tax family enrolled in a qualified health plan through a Marketplace.
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The enrolled individual is lawfully present in the United States and is not eligible for Medicaid.
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The taxpayer otherwise qualifies as an applicable taxpayer (without taking into account the Federal poverty line percentage).
Household Income Above 400% of the Federal Poverty Line
If the computed Federal poverty level (line 5 of Form 8962) is more than 400, the taxpayer cannot take the PTC and must repay, except for 2020, the APTC paid for all individuals in their tax family. This is so even if the Marketplace apparently provided incorrect information and allowed the taxpayer to purchase their insurance through the Marketplace using APTC to pay part of the premiums when their income exceeded 400% of the poverty line (Carol Sue Walker and Theodore Paul Walker v. Commissioner., U.S. Tax Court, T.C. Summary Opinion 2017-50).
Minimum Essential Health Coverage
As currently defined by ACA, includes government sponsored programs, eligible employer sponsored plans, plans in the individual market, certain grandfathered group health plans and other coverage recognized by the Department of Health and Human Services (HHS). A taxpayer cannot claim the PTC for any individual in the taxpayer’s tax family for any month when that individual is eligible for minimum essential coverage, except for coverage purchased through the individual market. Other types of minimum essential coverage include:
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Most government-sponsored programs (including comprehensive Medicaid, Medicare parts A or C, and the Children’s Health Insurance Program (CHIP)).
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Most employer-sponsored coverage (if the premiums are affordable and the deductibles and co-pays are no more than a certain amount).
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Other health coverage the Department of Health and Human Services designates as minimum essential coverage.
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Coverage purchased in the individual market outside the Marketplace is minimum essential coverage, but it does not qualify for the PTC.
For more details on minimum essential coverage, see Minimum essential coverage in Pub. 974.
Child Born, Adopted or Placed With Taxpayer for Foster Care During The Month
If a taxpayer enrolls a newborn child (or a child newly adopted or placed for foster care) in a qualified health plan, the child is treated as enrolled as of the first day of the month the child was born, adopted, or placed for foster care. The child is included in the coverage family for the month of birth, adoption, or foster care placement.
Qualified Health Plan
For purposes of the PTC, a qualified health plan is a health insurance plan or policy purchased through a Marketplace at the Bronze, Silver, Gold, or Platinum level. Plans sold as “catastrophic” coverage and plans purchased through the Small Business Health Options Program (SHOP) do not qualify a taxpayer to take the PTC.
Enrollment Premiums
The enrollment premiums are the total amount of the premiums for the month for one or more qualified health plans in which any individual in the taxpayer’s tax family enrolled. Form 1095-A, Part III, Column A, reports the enrollment.
Failure to Pay Premiums
A taxpayer is not allowed a monthly credit amount for the month if the portion of the enrollment premium for that month has not been paid by the unextended due date of the taxpayer’s tax return (Reg. §1.36B-3(c)(1)(ii)).
Failure to File a Return
If a taxpayer qualified for APTC and does not file a return, then the taxpayer will not be qualified for APTC or cost-sharing reductions in subsequent years. Example: Does not file a 2020 return, not qualified for APTC in 2021 or future years. (IRS Q&A 23).
SLCSP
Refers to the “second lowest cost silver plan”. The premiums for the SLCSP are used to calculate the PTC. See also “Determining the Proper SLCSP Premiums,” below.
Form 8962
Must be filed if:
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APTC was paid for the taxpayer or any member of the taxpayer’s family.
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APTC was paid for an individual for whom the taxpayer told the Marketplace they would claim a personal exemption, if no one else claims a personal exemption for that individual.