Premium Tax Credits are a form of subsidy provided by the federal government to help lower the cost of health insurance for eligible individuals and families. These credits are applied to your monthly insurance premiums, reducing the amount you pay out of pocket.

2. How Do I Qualify for Premium Tax Credits?

To qualify for Premium Tax Credits, you must:

  • Purchase your insurance through the Health Insurance Marketplace.
  • Have a household income between 100% and 400% of the federal poverty level (FPL). For 2023, that’s between $12,880 and $51,520 for an individual, or between $26,500 and $106,000 for a family of four.
  • Not be eligible for other forms of acceptable health coverage, such as through an employer or government program like Medicaid or Medicare.

3. How are Premium Tax Credits Calculated?

The amount of your Premium Tax Credit is based on the cost of a benchmark plan in your area and your household income. The benchmark plan is the second-lowest cost Silver plan available in your area. The lower your income, the higher your Premium Tax Credit will be.

4. How Do I Use Premium Tax Credits?

You have two options for using your Premium Tax Credit:

  • You can choose to have some or all of the credit paid in advance to your insurance company to lower your monthly premiums.
  • Alternatively, you can pay the full premium amount yourself each month and then claim the full Premium Tax Credit when you file your tax return.

5. Reconciling Premium Tax Credits

It’s important to keep your Marketplace account updated with any changes to your income or household size throughout the year. These changes can affect the amount of Premium Tax Credit you’re eligible for. If your actual income ends up being higher than you estimated, you may have to repay some or all of the credit you received when you file your taxes.

6. What if I Don’t Qualify for Premium Tax Credits?

If your income is too high to qualify for Premium Tax Credits, consider other ways to save on health insurance, such as employer-sponsored plans, high-deductible health plans with a Health Savings Account, or checking if you qualify for other government programs.


Understanding Premium Tax Credits can be your key to accessing affordable health insurance coverage. While navigating the ins and outs of these credits can seem complex, gaining a basic understanding can potentially save you a substantial amount of money and make healthcare more accessible. Stay tuned to our blog for more health insurance insights and advice.