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FAQ: Premium Tax Credits (PTCs) and Cost-Sharing Reductions (CSRs)

July 2018

ACE TA Center

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Financial support is available for many consumers who get health coverage through the Marketplace. Learn how Premium Tax Credits (PTCs) and Cost-Sharing Reductions (CSRs) can help Ryan White HIV/AIDS Program (RWHAP) clients pay for health insurance.

Premium Tax Credit (PTC)

Premium tax credits help lower the cost of premiums for health coverage purchased through the Health Insurance Marketplace. Advance payments of the tax credit can be used right away to lower your monthly premium costs.

Cost-Sharing Reduction (CSR)

A discount that lowers the amount individuals and families have to pay out-of-pocket for deductibles, coinsurance, and copayments. CSRs are NOT used to pay premiums.

If eligible, a person may receive both a PTC and a CSR. People who apply for PTCs are automatically assessed for CSRs.

Frequently Asked Questions

  1. Who is eligible?
  2. How much financial help is available?
  3. What income is considered?
  4. How are PTCs and CSRs given out?
  5. Do clients need to file a federal tax return?
  6. How do clients apply for a PTC or CSR?
  7. Will clients still have to pay for coverage?
  8. Can ADAPs help if the cost of care with an PTC and CSR is still unaffordable?
  9. How do clients renew their financial assistance?
  10. Is financial assistance reviewed at the end of the year to account for changes in clients’ circumstances?

Answers

1. Who is eligible?

APTCIndividuals may be eligible for a premium tax credit if they meet all of the following criteria:

  • Buy health insurance through the Marketplace 
  • Have annual household incomes between 100% to 400% FPL 
  • Are ineligible for other “minimum essential coverage” 
  • Are ineligible for Medicare, Medicaid, CHIP or TRICARE programs 
  • Do not file a Married Filing Separately tax return (unless victim of domestic abuse or spousal abandonment) 
  • Cannot be claimed as a dependent by another person

CSRIndividuals and families may be eligible for savings on out-of-pocket costs if they meet all of the following criteria:

  • Have annual household income between 100% to 250% FPL 
  • Are eligible for a premium tax credit 
  • Enroll in a CSR Silver-level plan on the Marketplace

Clients are not eligible for a PTC or a CSR if they are eligible for “minimum essential coverage” outside the Marketplace. Minimum essential coverage includes most other types of health insurance such as Medicare or Medicaid. It also includes employer-sponsored coverage that is affordable and provides minimum value. Employers must notify employees if plans meet these two requirements.

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2. How much financial help is available? 

APTCThe premium tax credits are administered on a sliding-scale based on the client’s income and household size. Those who have a lower income get a larger credit to help cover the cost of their insurance. In other words, the higher your income, the lower the amount of your credit.

CSRCost-sharing reductions are based on income and household size. The lower a person’s income, the more they will benefit from a CSR.

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3. What income is considered?

APTC and CSRBoth subsidies are determined based on modified adjusted gross income (MAGI). Generally, MAGI is the individual or household’s adjusted gross income, plus any tax-exempt Social Security, interest, or foreign income.

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4. How are PTCs and CSRs given out?
5. Do clients need to file a federal tax return?
6. How do clients apply for a PTC or CSR?

APTCPTCs can be used for any metal-level plan (Platinum, Gold, Silver, or Bronze). The amount of the PTC is based on the cost of the Silver-level plan, but it can be applied to any plan, except catastrophic plans.

CSR CSRs are only available for Silver-level plans.

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8. Will clients still have to pay for coverage?
9. Can ADAPs help if the cost of care with an PTC and CSR is still unaffordable?
10. How do clients renew their financial assistance?

APTC and CSRChanges in some circumstances can affect the PTC or CSR amount. These circumstances include change in household income; life events such as marriage, divorce, birth, or adoption of a child; other changes to household composition; and gaining or losing eligibility for government or employer health care coverage. Note that changes in household income or composition may not qualify as a life event that would allow someone to enroll during a Special Enrollment Period.

It is important for clients to report accurate income information and any income or family size changes throughout the year to avoid owing money at the end of the year.

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12. Is financial assistance reviewed at the end of the year to account for changes in clients’ circumstances?

APTC and CSRYes. Lawfully present immigrants with incomes between 100% to 400% FPL may be eligible for premium tax credits and those with incomes between 100% to 250% FPL may also be eligible for cost-sharing reductions. Lawfully present immigrants with household incomes below 100% FPL and not otherwise eligible for Medicaid based on immigration status may be eligible for tax credits and lower out-of-pocket costs if they meet all other eligibility requirements.

Undocumented immigrants are not eligible to buy health coverage through the Marketplace. They are not eligible for premium tax credits or other savings on Marketplace plans.

For more information on how immigration status may affect eligibility for financial help in the Marketplace, visit the archived webinar titled, “Access to Health Coverage for Immigrants Living with HIV.” Expert presenters explain how some immigrants may qualify for Marketplace coverage, depending on their immigration status, and how immigrants can access other federal health care programs.

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14. How do PTCs and CSRs compare?
 PTCCSR
Can they be used to pay for:
Premiumscheckx
Deductiblesxcheck
Copaysxcheck
Coinsurancexcheck
How the financial assistance is applied:
Money sent directly to the insurer every month to lower the premiumcheck
for APTCs only
x
Money sent to the insured individual in one lump sum once their annual taxes have been file

check
for PTCs only

x
Discounts given by the insurer to lower an individual's out-of-pocket costsxcheck
Can they be used for the following QHP categories?
Platinumcheckx
Goldcheckx
Silvercheckcheck
Bronzecheckx
Reconciled at the end of the year?checkx
Sources

http://www.healthreformbeyondthebasics.org/cost-sharing-charges-in-marketplace-health-insurance-plans-part-2/
http://www.irs.gov/uac/The-Premium-Tax-Credit

Related ACE TA Center Sources

Help Clients Prepare for Tax Season
Taxes and Health Coverage - Consumer Resource
10/10/15 webinar: Everything you wanted to know about cost sharing and tax credits in 2016

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