Here’s How to Lower Healthcare Costs (With a Tax Credit)

December 28, 2016

Who wouldn’t want to lower healthcare costs?


Well, the federal government has created a plan to help individuals and families who can’t afford healthcare due to the cost.

It’s called the tax credit.

And if you’re applying for individual or family health insurance on the Marketplace, you definitely want to explore whether you qualify for one or not.

Officially, it’s called the Advanced Premium Tax Credit (APTC), which is basically a federal subsidy that individuals and families can take advantage of when purchasing a policy to make it more affordable.

Learn more about health insurance! Speak with One of Our Specialists

Here’s the skinny on the tax credit and how to apply:

  • How is it calculated? The tax credit is based on your annual income and the Federal Poverty Level. In general, the lower your income is, the higher your subsidy will be.
  • How can you figure out your tax credit? You can use the federal guidelines to calculate your credit. You will qualify for the tax credit if your income level is between 100 and 400 percent of the poverty level for the size of your household. You can try to figure it out on your own, but it’s best to work with a trusted advisor.
  • Will my tax credit change? Throughout the course of a year, your tax credit qualification could change if your income increases or decreases, or you lose or gain a member of your household.
  • What are cost-sharing deductions? If you qualify for a tax credit, you may also qualify for other savings on out-of-pocket costs, such as copayments or deductibles. However, you have to buy a plan in the Silver category (or below) on the Marketplace to qualify.
  • What if I don’t qualify for a tax credit? Your income is likely too high if you don’t qualify for a tax credit. However, you can still purchase health insurance on the Marketplace even if you don’t have a tax credit. You may also purchase health insurance off the Marketplace.

Here’s an example of how the tax credit could work:

If your family of four receives $47,100 worth of income in the last year, you’d be at around 200 percent of the federal poverty level.

That means you’d be responsible for approximately 6 percent, based on the government’s guidelines  –  or about $250 per month).

Based on a Silver plan, which costs around $430 per month, you’d earn the difference between the two toward your plan, which is $185.

If you chose a Bronze plan, which is typically cheaper, you could apply that amount toward the lower-priced plan. That’s how tax credits work.

Calculating your actual tax credit to see if you qualify can be a complicated process. It’s best to get help from a qualified expert.

InsureOne Benefits is here to help. Contact Us to have one of our Tax Credit Specialists walk you through the process.