What are Obamacare subsidies?
Marketplace subsidies, called premium tax credits (APTC), reduce what you pay each month for your health insurance. They are calculated based on your estimated income and household size, and can be applied directly to the monthly premium.
Some people pay very little or even $0 a month for a plan, depending on their case. It's not guaranteed: it depends on your situation and the plans available in your ZIP code.
Factors reviewed
- Household income: an estimate of your income for the year is used.
- Household size: how many people file taxes with you, including spouse and dependents.
- State and ZIP code: prices and plans vary by location.
- Employer insurance: if your job offers a plan considered affordable, you generally don't qualify for the credit.
- Immigration status: citizens, permanent residents and some categories with lawful presence may be eligible. It is verified case by case.
If you work for yourself (1099)
Self-employed workers, contractors and gig platform drivers can qualify using their estimated net income for the year, that is, what you earn after business expenses.
Since your income may vary, it's worth reviewing your estimate during the year and updating it if it changes significantly.
What happens when you file taxes
When you file taxes, the credit you received during the year is compared with the one you were actually entitled to. If your income differed from the estimate, you may get a larger refund or owe part of it.
That's why it's important to estimate your income carefully. An agent can help you do it at no cost.
Notice: This article is informational and does not constitute legal or tax advice. Eligibility, plan availability and subsidies depend on your information, your state of residence and current Marketplace rules. Marseguros USA is not a government agency.
