If you bought health insurance through one of the Health Care Exchanges, also known as Marketplaces, you should receive a Form 1095-A that provides information about your insurance policy, your premiums (the cost you pay for insurance), any advance payment of premium tax credit and the people in your household covered by the policy.
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The Affordable Care Act, also known as Obamacare, requires most U.S. residents to have health insurance, but it also offers a tax break, the premium tax credit, to help offset the costs of health coverage for those who qualify. If you bought coverage through one of the health insurance marketplaces, you should receive Form 1095-A, that provides information needed to claim the tax credit.
The "Marketplace" is the government's term for the online insurance markets or "exchanges" set up under the law commonly known as Obamacare. Only people who buy coverage through the Marketplace are eligible for the premium tax credit.
If you bought your plan there, you should get a Form 1095-A, also called the "Health Insurance Marketplace Statement." The IRS also gets a copy of the form. The form provides information about your insurance policy, your premiums (the cost you pay for insurance), any advance payment of premium tax credit and the people in your household covered by the policy.
Insurance companies in health care exchanges provide you with the 1095-A form. This form includes:
You use this information to complete your income tax filing, adjust any tax credit payments, claim any premium tax credits that may be due and calculate any of the tax credit that you are required to pay back if you received too much advance premium tax credit during the year.
Your income has to be within a certain range to qualify for the premium tax credit. That income range is between 100% - 400% of the federal poverty level. As of 2022, the federal poverty level for most of the United States was $13,590 for a single person. The 2022 amounts are the latest available during open enrollment for 2023 and are therefore used with your 2023 tax return.
Multiply the total by 4 to get 400% of the level. Therefore, the eligible ranges for use with your 2023 taxes are:
For households with more than 8 people, add $4,720 for each additional person per year.
Poverty levels are higher in Alaska and Hawaii, where the cost of living is higher.
If you have any of the premium tax credit left over, you could use it to reduce your taxes or receive a refund.
Taxpayers who are eligible for the premium tax credit have a choice in how they receive it. You generally make the choice at the time you buy coverage in the Marketplace. The options are:
The first option is pretty straightforward: At tax-filing time, you figure the amount of your credit and then subtract that amount from your tax liability.
The second option is more complicated, because the government gives you the credit in advance—by sending money to your insurer to reduce your premiums. In this case, you figure the amount of your credit and compare it to the amount paid to your insurer to reduce your premiums.
Whichever option you choose for taking the premium tax credit, you claim it by filing Form 8962 with your tax return. You'll need your Form 1095-A to fill out this form.
This can happen if your income increases during the year and you didn't update your information with the Marketplace.
If you use TurboTax to prepare your tax return, the software will ask you the questions necessary to complete Form 8962 and attach it to your tax return for you.
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