The Premium Tax Credit - The Basics

The premium tax credit – also known as PTC – is a refundable credit that helps eligible individuals and families cover the premiums for their health insurance purchased through the Health Insurance Marketplace. To get this credit, you must meet certain requirements and file a tax return with Form 8962, Premium Tax Credit.

Who Qualifies

You are eligible for the premium tax credit if you meet all of the following requirements. You:

• Have household income that falls within a certain range.
• Do not file a tax return using the filing status of Married Filing Separately
  • There is an exception to this rule that allows certain victims of domestic abuse and spousal abandonment to claim the credit using Married Filing Separately; for more information, see the Premium Tax Credit questions and answers.
• Cannot be claimed as a dependent by another person.
• Meet these additional requirements: In the same month, you or a family member:
  • Have health insurance coverage through a Health Insurance Marketplace.
  • Are not able to get affordable coverage through an eligible employer-sponsored plan that provides minimum value.
  • Are not eligible for coverage through a government program, like Medicaid, Medicare, CHIP or TRICARE.
  • Pay the share of premiums not covered by advance credit payments.

For more information about these eligibility requirements see Eligibility for the Premium Tax Credit.

When you enroll, the Marketplace will determine if you are eligible for advance payments of the premium tax credit, also called advance credit payments.  Advance credit payments are amounts paid to your insurance company on your behalf to lower the out-of-pocket cost for your health insurance premiums.  

For more information about the Premium Tax Credit, see our Questions and Answers and other guidance PDF.

Change in Circumstances

If you benefit from advance payments of the premium tax credit, it is important to report life changes to the Marketplace as they happen throughout the year.

Certain changes to your household, income or family size may affect the amount of your premium tax credit. These changes can alter your tax refund, or cause you to owe tax. Reporting these changes promptly will help you get the proper type and amount of financial assistance. For more information, see the Changes in Circumstances section of our Claiming the Credit and Reconciling Advance Credit Payments page.

Claiming and Reconciling the Credit

If you get the benefit of advance credit payments in any amount – or if you plan to claim the premium tax credit – you must file a federal income tax return and attach Form 8962, Premium Tax Credit, to your return.  You claim the premium tax credit and reconcile the credit with the amount of your advance credit payments for the year on Form 8962.

You must file a return even if you’re usually not required to do so. Filing your return without reconciling your advance payments will delay your refund and may affect future advance credit payments. For more information on filing a return to claim and reconcile the credit see Premium Tax Credit: Claiming the Credit and Reconciling Advance Credit Payments.

Filing electronically is the easiest way to file a complete and accurate tax return. Electronic filing options include free volunteer assistance, IRS Free File, commercial software and professional assistance.

Key Documents and Forms

Form 1095-A, Health Insurance Marketplace Statement

Your Marketplace will provide Form 1095-A if you or one of your dependents had coverage through a Marketplace. For more information, visit our Health Insurance Marketplace Statement page.

If you also receive Form 1095-B or Form 1095-C, which are unrelated to the Marketplace, see our questions and answers for information about how these forms affect your tax return.

Form 8962, Premium Tax Credit

Use the information on Form 1095-A to claim the credit or reconcile advance credit payments on Form 8962, Premium Tax Credit.

Form 1040

File Form 8962 with your 1040 or 1040-NR.

Pub. 974, Premium Tax Credit

View Publication 974 PDF for more details on the premium tax credit.