The Affordable Care Act legislation included a new tax credit, also known as an assistance subsidy, and cost-sharing subsidies to help qualifying Americans pay for premiums, deductibles, copayments and coinsurance. Your credit amount depends on your annual household income and cost of your state's marketplace premiums.

In general, you may qualify for the credit if you meet all of the following requirements:

  • You must purchase health insurance through a marketplace;
  • You don't have access to employer-sponsored insurance;
  • You don't qualify for government programs like Medicare and Medicaid;
  • Your employer-provided insurance covers less than 60 percent of covered benefits OR your premiums are more than 9.5 percent of your annual household income;
  • You do not file a Married Filing Separately tax return (unless you meet criteria which allows certain victims of domestic abuse and spousal abandonment to claim the premium tax credit using the Married Filing Separately filing status);
  • You aren't being claimed as a dependent by another person;, and
  • Your annual household income is between 100 percent and 400 percent* of the federal poverty level. (*Percentages may vary by state.)

Estimate your eligibility with TaxAct's Healthcare Tax Credit Calculator.

If you're eligible to receive the credit in advance, the money is sent directly to your health insurance company for payment towards your premiums. In this situation, the credit is often referred to as the "Advanced Premium Tax Credit."

If you qualify for the credit but choose to pay 100 percent of your premiums out of pocket, you can receive the credit as a refund when you file your 2015 tax return (due April 18, 2016).

Because changes in your marital status, number of dependents, or income can impact your tax credit eligibility, you are required to contact your marketplace with these changes. You will also be required to file a federal tax return each year to verify the amount of your advanced tax credit.

You may have to either pay back a portion of the credit or you may be entitled to receive an additional amount when filing your tax return. You'll receive Form 1095-A from your marketplace in January 2016 with the insurance and tax credit information you'll need to report on your tax return.

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