Eligible Individuals (Applicable Taxpayer)
The refundable premium tax credit is available to individuals:
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Whose household income for the taxable year is at least 100% (133% in states with expanded Medicaid) of the federal poverty level ("FPL") (for years other than 2021 - 2025, the credit is not available to those with household income more than 400% of the FPL),
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Who purchase qualified health care insurance through a government-sponsored Marketplace (the insurance MUST be purchased through a Marketplace to qualify for the credit)
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Who CANNOT be claimed as a dependent by another
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Who are NOT eligible for minimum essential coverage through Medicaid, Medicare, employer-sponsored insurance, or other acceptable types of coverage (Preamble to Prop Regs, 8/17/2011). Solely for purposes of determining whether an individual is eligible for government plans such as Children’s Health Insurance Program (CHIP) or Medicaid, Notice 2013-41 provides the following guidance:
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If an individual loses CHIP coverage and is locked out for a period of time (lockout period) due to failure to pay premiums, the individual is treated as eligible for CHIP and eligible for qualified health plan coverage subsidized by the premium tax credit during the lockout period.
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An individual who may not enroll in CHIP during a pre-enrollment waiting period is treated as not eligible for CHIP coverage during the waiting period. Accordingly, the individual may be eligible for qualified health plan coverage subsidized by the premium tax credit during this period.
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An individual who is terminated from Medicaid or CHIP for failure to pay premiums is treated as eligible for Medicaid or CHIP during any period for which the individual would be eligible for Medicaid or CHIP except for the failure to pay premiums.
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The Treasury Department and the IRS have determined that Medicaid coverage limited to COVID-19 testing and diagnostic services under section 6004(a)(3) of the Families First Act is not minimum essential coverage under a government-sponsored program. Thus, an individual’s eligibility for this coverage for one or more months does not prevent those months from qualifying as coverage months for purposes of determining eligibility for the premium tax credit under section 36B. (Notice 2020-66)
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Who, if married, must file a joint tax return (but see special rules for victims of domestic violence), and
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Who are NOT employees that are offered minimum essential coverage under an employer-sponsored plan., An individual is eligible for employer-sponsored minimum essential coverage only if the employee's share of premiums is "affordable" and provides "minimum value". See the affordable percentage table below.
Important - How Does One Determine if the Employer Offered the Employee Affordable Minimum Essential Health Insurance?
Well, all you need to do is look at the Form 1095-C, Part II, Line 14 codes. For months they were offered coverage, they are not qualified for the premium tax credit. Be sure to review the 1095-C before completing the return to avoid IRS notices.