can you help in understanding What is the premium tax credit as I read it on the IRS but I did understand it , so can you clarify to me in a simple way or with examples ?
and how is it refundable?
I only have a Medi-Cal with no share cost, so is there any probability to pay money on that Medi-Cal?
Omargabry, I can help with that!
First though, if you are on Medi-Cal and paying no premiums (no cost share), the premium tax credit will not apply to you. I'll explain though, as that will help you understand why and will answer your additional questions.
One requirement to qualify for the Premium Tax Credit (PTC) is that you purchase insurance through a Health Insurance Marketplace and pay the share of premiums not covered by advance credits. (The full requirements can be found here: Who Qualifies?)
When you sign up with a Marketplace plan, they will calculate a monthly premium amount, as well as a monthly 'credit' amount based on your income. So, let's assume your monthly premium amount for insurance is $800 and your credit amount (based on income) is $500. The remaining $300 per month is your responsibility.
The credit amount ($500 in the example) may be handled two separate ways:
1. If you qualify, the $500 will be sent directly to your insurance company and you will simply pay the $300 out of pocket each month. In this case (assuming your financial situation does not change throughout the year), you will not qualify for the PTC.
2. If you do not qualify to have the credit sent directly to the insurance company, you will pay the $300 plus the $500 credit amount each month out of pocket ($800 total). Then at tax time, you will receive a PTC refund of $6,000 ($500 x 12 months).
The important thing in both situations is to file the proper paperwork at tax time. This will ensure that the estimated credit calculated by the Marketplace at the beginning of the year was correct, based on your actual income reported on the tax return. So, it's possible that at the end of year your income could qualify you for a larger credit (giving a larger refund) or a smaller credit (which you may need to repay, if received in advance).
Again though, if you are on Medi-Cal and paid no premiums, this credit will not apply to you.
Omargabry, I can help with that!
First though, if you are on Medi-Cal and paying no premiums (no cost share), the premium tax credit will not apply to you. I'll explain though, as that will help you understand why and will answer your additional questions.
One requirement to qualify for the Premium Tax Credit (PTC) is that you purchase insurance through a Health Insurance Marketplace and pay the share of premiums not covered by advance credits. (The full requirements can be found here: Who Qualifies?)
When you sign up with a Marketplace plan, they will calculate a monthly premium amount, as well as a monthly 'credit' amount based on your income. So, let's assume your monthly premium amount for insurance is $800 and your credit amount (based on income) is $500. The remaining $300 per month is your responsibility.
The credit amount ($500 in the example) may be handled two separate ways:
1. If you qualify, the $500 will be sent directly to your insurance company and you will simply pay the $300 out of pocket each month. In this case (assuming your financial situation does not change throughout the year), you will not qualify for the PTC.
2. If you do not qualify to have the credit sent directly to the insurance company, you will pay the $300 plus the $500 credit amount each month out of pocket ($800 total). Then at tax time, you will receive a PTC refund of $6,000 ($500 x 12 months).
The important thing in both situations is to file the proper paperwork at tax time. This will ensure that the estimated credit calculated by the Marketplace at the beginning of they year was correct, based on your actual income reported on the tax return. So, it's possible that at the end of year your income could qualify you for a larger credit (giving a larger refund) or a smaller credit (which you may need to repay, if received in advance).
Again though, if you are on MediiCal and paid no premiums, this credit will not apply to you.