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Personal Tax5 min readMar 17, 2026
The Premium Tax Credit and Health Insurance Subsidies
If you buy health insurance through the ACA marketplace, you may qualify for a premium tax credit. Here's how to claim it and what to watch for.
Premium Tax Credit (PTC)
What Is the Premium Tax Credit?
A refundable credit that helps low-to-middle income individuals and families pay for health insurance purchased through the ACA marketplace.
Who Qualifies?
- Income between 100% and 400% of the federal poverty level (FPL)
- 2025 expansion: Income above 400% FPL may also qualify if marketplace plan costs more than 8.5% of income
- Not eligible for affordable employer-sponsored insurance or government coverage (Medicaid, Medicare)
How It Works
Advanced PTC
- Estimated credit paid directly to your insurance company each month
- Reduces your monthly premium
Reconciling at Tax Time
- Report on Form 8962
- If your actual income was higher than estimated: repay excess advanced credit
- If lower: claim additional credit
The Repayment Cap
Repayment of excess advanced PTC is capped based on income level (for incomes below 400% FPL).
Cliff at 400% FPL
Income just above 400% FPL may not qualify for the credit. Watch this carefully with year-end income management.
What Counts as Income?
Modified AGI includes:
- Adjusted gross income
- Tax-exempt interest
- Excluded foreign income
On marketplace insurance? Make sure you're getting the correct credit amount and avoiding a big reconciliation bill.