Unfortunately, the Premium Tax Credit does not work like that. When you enroll in coverage and request financial assistance, the Health Insurance Marketplace will estimate the amount of the premium tax credit you will be allowed for the year of coverage. To make this estimate, the Marketplace uses information you provide about:
- Your family composition - credits are not determined individually, but rather, as a family
- Your household income
- Whether those you are enrolling are eligible for other non-Marketplace coverage
Based on the estimate from the Marketplace, you can choose to have all, some, or none of your estimated credit paid in advance directly to your insurance company on your behalf. These payments – which are called advance payments of the premium tax credit or advance credit payments – lower what you pay out-of-pocket for your monthly premiums.
If the premium tax credit computed on your return is more than the advance credit payments made on your behalf during the year, the difference will increase your refund or lower the amount of tax you owe. This will be reported on Form 1040, Schedule 3.
If the advance credit payments are more than the amount of the premium tax credit you are allowed, called excess APTC, you will add all – or a portion of – the excess APTC to your tax liability on Form 1040, Schedule 2. This will result in either a smaller refund or a larger balance due.
About the Premium Tax Credit
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