Advance Premium Tax Credit (APTC)
The ACA’s advance premium tax credit (APTC) subsidies are only available to qualified individuals purchasing
coverage through health insurance exchanges and are based on the purchase of the Silver (70%) plan.
The law creates sliding scale premium assistance tax credits for non-Medicaid eligible individuals with
incomes up to 400% the Federal Poverty Level (FPL) to buy coverage through the exchange. The premium
subsidy tax credit is paid directly to the individual’s insurer.
2023 FEDERAL POVERTY LEVELS
| 2023 Federal Poverty Levels | |||||
| Size of
Household |
138% | 150% | 200% | 300% | 400% |
| 1 | $ 18,754 | $ 20,385 | $ 27,180 | $ 40,770 | $ 54,360 |
| 2 | $ 25,268 | $ 27,465 | $ 36,620 | $ 54,930 | $ 73,240 |
| 3 | $ 31,781 | $ 34,545 | $ 46,060 | $ 69,090 | $ 92,120 |
| 4 | $ 38,295 | $ 41,625 | $ 55,500 | $ 83,250 | $ 111,000 |
| 5 | $ 44,809 | $ 48,705 | $ 64,940 | $ 97,410 | $ 129,880 |
| 6 | $ 51,322 | $ 55,785 | $ 74,380 | $ 111,570 | $ 148,760 |
| 7 | $ 57,836 | $ 62,865 | $ 83,820 | $ 125,730 | $ 167,640 |
| 8 | $ 64,349 | $ 69,945 | $ 93,260 | $ 139,890 | $ 186,520 |
Please note: Under ARPA the Affordability standard is reduced for 2 years eff Jan 1, 2021 through Dec 31, 2022 to
8.5% of household income. And those with incomes People with income above 400% FPL will be newly
eligible for marketplace premium subsidies
The ACA law text reads 133 percent, but also calls for a new method of calculating income bringing the
minimum to 138% and they are choosing to disregard the 5% discrepancy.
If the family contains more than 8 people, then add $4,160 for each additional.
The Federal Poverty Level for Alaska and Hawaii are different. Visit the ASPE for more information.
Married couples must file joint tax return in order to be eligible for premium subsidies.
There are special rules for those aliens lawfully present in U.S. with household income below 100% FPL but not
Medicaid eligible. These individuals are treated as eligible for exchange-based subsidies with household income
of 100% FPL for the family size involved.
Ineligible individuals:
- The individual must be a citizen or national of the U.S. or an alien lawfully present in the U.S.
- Generally prohibits those eligible for minimum essential coverage under employer-sponsored plans*,
Medicare, Medicaid, CHIP, TRICARE, VA, AmeriCorps, Peace Corps and other coverage deemed acceptable
by HHS, from receiving subsidies.- *Please note: DU26 remain eligible for a subsidy even when eligible for coverage on the parent’s plan if
the DU26 is independent for other purposes beside health insurance.
- *Please note: DU26 remain eligible for a subsidy even when eligible for coverage on the parent’s plan if
Cost Sharing
Individuals with family incomes at or below 250% of the FPL (American Indians below 300%) also qualify for
reduced cost-sharing or out-of-pocket expenses. Cost sharing assistance is only available to purchase the
Silver (70%) plan. Insurance carriers are reimbursed for reductions from the federal government
| Household Income Percentage of the Federal Poverty Line | Initial Percentage | Final Percentage |
| Less than 133% | 1.92% | 1.92% |
| 133% – 150% | 2.88% | 3.84% |
| 150% – 200% | 3.84% | 6.05% |
| 200% – 250% | 6.05% | 7.73% |
| 250% – 300% | 7.73% | 9.12% |
| 300% – Less than 400% | 9.12% | 9.12% |
Household Income includes those who files jointly and anyone who is tax dependent.
Income includes:
- Wages, salaries and tips
- Any excluded foreign income
- Tax exempt interest received or accrued
- Net income minus business expenses
- Unemployment compensation
- Social Security payments including those from disability payment
- Alimony
- Investment income
- Pension income
- Rental income
- Taxable income such as awards, winnings
Assets are not considered when determining eligibility.
APTC is reconciled when taxes are filed at the end of the tax year. In some cases, individuals
will have received too much of a credit while in other cases they may qualify for more credit
when their taxes are calculated. Individuals who receive a subsidy must file IRS Form 8962.
HHS has posted the sample employer notice that the federally-facilitated exchanges will
send an employer when one of their employees accesses exchange coverage and gets a tax credit.
Recapture of overpaid subsidies:
If someone’s income increases and they did not advise the marketplace whereby the individual
obtained more subsidy than what they were entitled to, there is a limited recapture. They will
owe it back in the form of additional taxes.
There is no maximum for persons earning more than 400% of the FPL.
There is a full recapture if the individual was never eligible for subsidy to begin with
(e.g., illegal aliens are not eligible and would need to fully pay back the subsidy).
Form 1095-A is a tax form that will be sent to consumers that have been enrolled in health
insurance through the marketplace in the past year. Form 1095-A is needed to file taxes.
Similar to how tax households receive multiple W-2s if individuals have multiple jobs, some
tax households will get multiple Form 1095—as if they were covered under different plans
or changed plans during the year.
If anyone in the tax household enrolled in a health plan through the Health Insurance Marketplace,
they will receive a Form 1095-A—Health Insurance Marketplace Statement. The marketplace will
mail Form 1095-A by early February. Form 1095-A provides information that consumers need to
complete Form 8962—Premium Tax Credit (PTC).
The marketplace must also report this information to the IRS. The employer may be responsible for an
Employer Shared Responsibility (ESR) penalty payment if an employee received a subsidy on the exchange.