What Is a Premium Tax Credit and How Do I Claim It?

What Is the Premium Tax Credit?

The premium tax credit (PTC) is a federal subsidy that lowers the cost of health insurance purchased through the ACA marketplace. It's based on your income and household size relative to the federal poverty level (FPL).

Who Qualifies?

Your income is between 100% and 400% of the federal poverty level (or above 400% if premiums would exceed 8.5% of income)
You purchase coverage through the ACA Marketplace (healthcare.gov or your state exchange)
You are not eligible for affordable employer-sponsored coverage
You are not enrolled in Medicare or Medicaid
You are not claimed as a dependent by someone else

💡 For 2025, the 400% FPL cap is temporarily lifted — even higher-income people may qualify if premiums exceed 8.5% of their household income. Check the marketplace for your specific eligibility.

How Much Can You Get?

The credit is calculated to cap what you pay for a benchmark Silver plan at a percentage of your income:

Income 100–150% FPL: 0–2% of income
Income 150–200% FPL: 2–6% of income
Income 200–250% FPL: 6–8% of income
Income 250–400% FPL: 8–8.5% of income

Advance Payments vs Tax Return

You can take the credit in two ways:

Advance payments: Credit paid directly to your insurer each month, reducing what you owe. You reconcile at tax time.
Lump sum: Pay full premiums monthly and claim the full credit when you file your tax return.

⚠️ If your actual income is higher than estimated, you may have to repay some of the advance premium tax credit when you file taxes. Report income changes to the marketplace promptly.

Estimate Your ACA Subsidy

See how much premium tax credit you might qualify for based on your income.

Estimate Your ACA Subsidy →

Frequently Asked Questions

How do I claim the premium tax credit?

If you took advance payments, reconcile on IRS Form 8962 when filing your taxes. If you paid full premiums, claim the credit on Form 8962 and receive the full amount as a refund or reduction in taxes owed.

What if my income changes during the year?

Report income changes to your marketplace as soon as possible. If your income increases, you may be receiving more advance credit than you're entitled to — and will owe the difference at tax time. If income decreases, you may be entitled to more credit.

Can I get the premium tax credit if I have Medicare?

No. If you are enrolled in Medicare, you are not eligible for premium tax credits on marketplace plans. Medicare eligibility makes you ineligible even if you haven't yet enrolled.