Advance Premium Tax Credit & Reconciliation


So what are Advance Premium Tax Credits? Let’s break it down.

TAX CREDITS – As part of ACA, this is how the government provides financial help to lower the monthly cost of health insurance.  Tax credits are usually claimed when you file your tax return. The Advance Premium Tax Credit works differently.  After you enroll in a Marketplace health insurance plan and are determined eligible for the Advance Premium Tax Credit, this tax credit is ADVANCED to the health insurance company on your behalf and applied directly to your monthly health insurance premium, to lower your monthly cost. This occurs throughout the year, before you file your tax return.

When you enroll in a Marketplace health insurance plan, you are asked to provide an estimate of your household income.   This estimate, along with the number of people in your household, is used to determine your eligibility for the Advance Premium Tax Credit.  It’s also used to determine how much tax credit you receive.   


Understanding Reconciliation

If you and/or a member of your household receive the Advance Premium Tax Credit, the tax credit must be reconciled when you file your tax return. The Advance Premium Tax Credit amount that you received was based on an estimate of your household income and your expected family size.  So when you file your taxes the amount of Advance Premium Tax Credit you received will be reconciled against what you were actually eligible for based on your actual household income. 

If your actual income was less than what you estimated, you may get money back, which could increase your refund amount.  However, if your actual income was more than what you estimated, you may need to repay some of your Advance Premium Tax Credit, which could reduce your refund amount. The credit could also be affected by changes in your family size, such as the birth of a child. 

One thing is certain. No one is better qualified to prepare your tax return, and help you find out if you’re impacted than H&R Block Tax Professionals who are ACA Specialists. And don’t forget, you’ll need your 1095-A form when you file. This form is necessary to reconcile the Advance Premium Tax Credit you received.



The Advance Premium Tax Credit will help pay for your health insurance premiums throughout the year. Your eligibility is based on an estimate of your income that you provide. If your actual income was higher than you estimated, you may need to repay some or all of the money you received. If you estimated your income correctly, you will not have to repay any money you received. If your income was lower than you estimated, you may get money credited to your return when you file. If you or a member of your household received the Advance Premium Tax Credit, you must reconcile your taxes when you file. You’ll need your 1095-A form to do this. Reconciliation corrects the value of your Advance Premium Tax Credit by comparing your estimated income vs. your actual income when you file.



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