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Certified Public Accountant, New Jersey
Manny Forlenza CPA

Premium Tax Credit

The Premium Tax Credit, also referred to as the Health Insurance Premium Tax Credit, is a subsidy that the Federal Government will pay directly to the insurance company to cover a portion of the premium, which will make the actual out of pocket cost to the individual more affordable. The premium tax credit is based the premium cost of the second lowest cost Silver Plan and the household income level of the individual.


  PREMIUM ASSISTANCE TAX CREDIT CALCULATIONS
 
    Applicable Percentage From Table
 
  X Household Income
 
  = Affordable Premium Amount
 
  Less: Cost of 2nd Lowest Silver Plan
 
  = PREMIUM ASSISTANCE TAX CREDIT  

  PREMIUM ASSISTANCE TAX CREDIT CALCULATIONS – Example 1
Household size of 4, Income of $31,299 (less than 133% of FPL), Cost of Silver Plan $6,000
 
  Applicable Percentage From Table
2%
 
  X Household Income
$31,299
 
  = Affordable Premium Amount
$626
 
  Less: Cost of 2nd Lowest Silver Plan
$6,000
 
  - Affordable Premium Amount
($626)
 
  = PREMIUM ASSISTANCE TAX CREDIT
$5,374
 

  PREMIUM ASSISTANCE TAX CREDIT CALCULATIONS – Example 2
Household size of 4, Income of $31,400 (At least 133%, but less than 150% of FPL), Cost of Silver Plan $6,000
 
  Applicable Percentage From Table
3%
 
  X Household Income
$31,400
 
  = Affordable Premium Amount
$942
 
  Less: Cost of 2nd Lowest Silver Plan
$6,000
 
  - Affordable Premium Amount
($942)
 
  = PREMIUM ASSISTANCE TAX CREDIT
$5,058
 


  PREMIUM ASSISTANCE TAX CREDIT CALCULATIONS – Example 3
Household size of 4, Annual income of $50,000 (At least 200%, but less than 250% of FPL), Cost of Silver Plan $6,000
 
  Applicable Percentage From Table
6.73%
 
  X Household Income
$50,000
 
  = Affordable Premium Amount
$3,365
 
  Less: Cost of 2nd Lowest Silver Plan
$9,288
 
  - Affordable Premium Amount
($3,365)
 
  = PREMIUM ASSISTANCE TAX CREDIT
$5,923
 

PREMIUM ASSISTANCE TAX CREDIT CALCULATIONS – Example 2
Household size of 4, Income of $31,400 (At least 133%, but less than 150% of FPL), Cost of Silver Plan $6,000
Applicable Percentage From Table
3%
X Household Income
$31,400
= Affordable Premium Amount
$942
Less: Cost of 2ndLowest Silver Plan
$6,000
- Affordable Premium Amount
($942)
= PREMIUM ASSISTANCE TAX CREDIT
$5,058

PREMIUM ASSISTANCE TAX CREDIT CALCULATIONS – Example 2
Household size of 4, Income of $31,400 (At least 133%, but less than 150% of FPL), Cost of Silver Plan $6,000
Applicable Percentage From Table
3%
X Household Income
$31,400
= Affordable Premium Amount
$942
Less: Cost of 2ndLowest Silver Plan
$6,000
- Affordable Premium Amount
($942)
= PREMIUM ASSISTANCE TAX CREDIT
$5,058