Paying for health insurance can be difficult, but a tax credit for health insurance can make it easier to pay for your monthly premiums. Depending on your income, you may qualify for a tax credit for health insurance, reducing your insurance costs so you can still get the coverage you need.
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A tax credit for health insurance, called a premium tax credit or health insurance premium subsidy, is a federal subsidy that can reduce your monthly health insurance premiums. The Affordable Care Act (ACA) created these subsidies in 2014 to help make health insurance more affordable for individuals with low to middle incomes.
If you qualify for a premium tax credit, you can choose to apply the discount to your monthly insurance premium, or you can get the full credit amount as a refund on your federal income taxes.
To qualify for a health insurance tax credit, you need to make less than four times the federal poverty level. If you earn more but spend more than 8.5% of your income on health insurance premiums, then you may still qualify.
Under 2024 income guidelines, a single person can earn a maximum of $58,320, a family of two can earn $78,880, and a family of four can earn $120,000. Those rates are four times the federal poverty level, and are the most each family can earn while still qualifying for a tax credit, unless their health insurance costs more than 8.5% of their income.
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If you use a health insurance marketplace or exchange to apply for health insurance, the system will use your income information to determine if you qualify for tax credits. You’ll receive that information when you apply.
Your tax credit amount will depend on your family size and income. You can also use the KFF Health Insurance Marketplace Calculator to estimate what you’ll pay for insurance and see your estimated tax credit eligibility.
Even if you don’t currently qualify for a tax credit, life-changing events can make you eligible or change the subsidy amount that you qualify for. Events like gaining or losing health insurance coverage, an income change, the birth or adoption of a child, and a marriage or divorce can all impact your eligibility.
If you experience any of these events, it’s important to report them promptly so that you receive the appropriate tax credits.
If you don’t qualify for a tax credit, you can still save money on your health insurance by shopping around and comparing plans and premiums. You can get free health insurance quotes online today to see how different plans stack up.
Paige Cerulli Paige Cerulli is a freelance content writer and journalist who specializes in personal finance topics. She graduated from Westfield State University and brings more than a decade of professional writing experience to the ConsumerCoverage team. Paige’s work has appeared in outlets including USA Today, Business Insider, and more.
