Five Things You Need to Know About Advanced Tax Credits
Understanding How APTCs Help Lower the Cost of Your Health Insurance
February 5, 2025
The Affordable Care Act (ACA) makes health insurance more accessible through subsidies, including Advanced Premium Tax Credits (APTCs). If you're shopping for health coverage through Pennsylvania’s PENNIE Marketplace, understanding how these tax credits work can help you save money and choose the best plan for your needs.
Here are five key things you need to know about APTCs and how they can benefit you:
1. APTCs Reduce Your Monthly Health Insurance Costs
Advanced Premium Tax Credits help lower the monthly premiums for health plans purchased through the PENNIE Marketplace. Instead of paying the full cost of your insurance upfront and waiting for a tax refund, the credit is applied directly to your premium—reducing what you pay each month.
2. Your Income Determines Your Eligibility
APTCs are based on your household income and family size. If your income falls between 100% and 400% of the Federal Poverty Level (FPL), you may qualify. Pennsylvania also extends eligibility beyond 400% of the FPL, meaning even higher-income households may qualify for savings. The exact amount you receive depends on factors like your modified adjusted gross income (MAGI) and the cost of benchmark plans in your area.
3. You Must Enroll Through the PENNIE Marketplace
APTCs are only available for plans purchased through PENNIE, Pennsylvania’s official health insurance marketplace. If you buy a plan directly from an insurance company (outside of PENNIE), you won’t be eligible for APTCs, even if your income qualifies.
4. You Need to Update Your Income Every Year
Because APTCs are based on your estimated income for the year, it’s essential to update your information annually during Open Enrollment or anytime your income changes. If you overestimate your income, you may miss out on savings. If you underestimate, you may have to pay back some or all of the credit when you file your taxes.
5. You Can Choose How Much Credit to Use
You don’t have to apply the full APTC amount to your monthly premium. Some people choose to use a portion of the credit and receive the rest as a refund when they file their taxes. If you’re unsure about your income estimate, using a smaller portion of the credit can help reduce the risk of owing money later.
Need Help Navigating APTCs? We’ve Got You Covered!
Understanding how APTCs work can be confusing, but you don’t have to figure it out alone. At Stellar Health Benefits, we specialize in helping individuals and families enroll in PENNIE Marketplace plans and maximize their tax credit savings.