Health insurance coverage purchased through the Health Insurance Marketplace may be eligible for the premium tax credit. People with moderate incomes can take advantage of the credit “in advance” to offset the cost of coverage or can choose to receive the credit with their tax return.
How you chose to receive the tax credit affects how you report it on your return.
- If you chose to receive the tax credit in advance (to reduce the cost of insurance), it will be subtracted from the credit calculated on your tax return. If it turns out that the credit you received in advance was less than you were eligible for, it will be added to your tax refund, or it may reduce any tax you owe. It’s also possible that you received more of a credit than you deserved (if your income goes up during the year, for example). In this case, you’d have to “pay back” the over-payment in your tax return.
- If you chose to get your credit at the time of tax filing, you claim the full calculated amount which increases your refund or lowers the tax you owe.
If you bought your plan through the Marketplace, 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.
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