Intended to make health care more affordable for people with low to moderate incomes, you may qualify for a premium tax credit when you enroll. To be eligible for the credit, you generally need to satisfy three rules:
1). First, you need to get your health insurance coverage through the Health Insurance Marketplace. The open enrollment period to purchase health insurance coverage for 2014 through the Health Insurance Marketplace runs from October 1, 2013 through March 31, 2014.
2). Second, you need to have household income between one and four times the federal poverty line. For a family of four for tax year 2014, that means income from $23,550 to $94,200.
3). Third, you can’t be eligible for other coverage, such as Medicare, Medicaid, or sufficiently generous employer-sponsored coverage.
If you qualify, have a choice between two options of receiving the tax credit:
• Advancement For Health Care: You can choose to have some or all of the estimated credit paid in advance directly to your insurance company to lower what you pay out-of-pocket for your monthly premiums during 2014.
• Tax Return Credit: You can wait to get all of the credit when you file your 2014 tax return in 2015.
If you chose the advancement option, you should alert the health insurance marketplace of any changes in your income or family size during the year. Doing this will keep you informed in case you have to repay any excess advance payment that you no longer qualified for.