When you enroll in Marketplace coverage, you’ll learn if you qualify for a “premium tax credit” that lowers your premium – the amount you pay each month to your insurance plan. The amount of your premium tax credit depends on information including your estimated household income that you put on your Marketplace application for the year.
When it’s time to file your federal income tax return, the IRS will compare the information from your application, including income, with the information you report on your tax return:
- If your income is lower than what you told us on your application, or your household size increases, you may be eligible for a larger premium tax credit.
- If your income is higher than what you told us on your application, or your household size decreases, you may have to pay back some or all of your advance payments of the premium tax credit that were made to your insurance company.
Important: When you (and the tax filers on your application) file your federal income tax returns, you must “reconcile” any premium tax credits that you used during the year. Learn more about reconciling your tax credit.
How can I use my tax credit?
If you qualify for a tax credit, you can use all or some of it each month. The Marketplace will send your tax credit directly to your insurance company, so you’ll pay less each month. This is called taking an “advance payment of the premium tax credit.”
If you're worried about owing back any advance payments of the premium tax credit, you can decide to use a smaller amount of the tax credit toward your premium each month.
You can also choose to use none of your tax credit each month. Instead, you’ll get it back when you file your federal income taxes.
What if my household size or income changes?
It's important to promptly report any changes in household income and household family size to the Marketplace to make sure you're getting the most accurate tax credit amount. If you don't report changes, you may owe money back when you file your federal income taxes.
To update your application:
- Log into your Marketplace account.
- Choose the application you want to update.
- Click “Report a Life Change” on the left-hand menu.
- Read through the list of changes, and click “Report a Life Change” to get started.
- Select the kind of change you want to report.
- Select the “Update My Application” button.
- Navigate through your application and report any changes to your income.
- After you’ve submitted your application, you’ll continue to enrollment.
- If you qualify for a tax credit, you’ll see “Decide how much to lower your monthly premium.” You can select an option – use all, use some, or use none. If you select “use some,” you’ll be able to enter the amount you want to use.
- Continue through your application to select a plan and enroll in coverage.
Can I change how I’m using my tax credit, even if my household size or income hasn’t changed?
If it’s during the Open Enrollment Period or you’re eligible for a Special Enrollment Period, you can change how you’re using your tax credit.
To change how you’re using your tax credit:
- Log into your Marketplace account.
- Select your most recent application.
- Click “My Plans & Programs” on the left-hand menu.
- Select the “Change Plans” button, even if you want to stay in your same plan.
- You’ll see “Decide how much to lower your monthly premium.” You can select an option – use all, use some, or use none. If you select “use some,” you’ll be able to enter the amount you want to use.
- Continue through your application to confirm your coverage changes (even if you stay in the same plan) and enroll in coverage.
What if it’s not Open Enrollment or I’m not eligible for a Special Enrollment Period?
You can still change how you’re using your tax credit, but you’ll need to follow different steps:
- Log into your Marketplace account.
- Choose the application you want to update.
- Click “Report a Life Change” on the left-hand menu.
- Select the “Report a Life Change” button.
- Select “Update income or other information.”
- Select the “Update My Application” button.
- Navigate through your application. You don’t need to make any application changes, unless you’ve experienced a life change.
- After you’ve submitted your application, you’ll continue to enrollment.
- If you qualify for a tax credit, you’ll see “Decide how much to lower your monthly premium.” You can select an option – use all, use some, or use none. If you select “use some,” you’ll be able to enter the amount you want to use.
- Continue through your application to confirm your coverage changes (even if you stay in the same plan) and enroll in coverage.