Advanced Premium Tax Credit Reconciliation Questions and Answers

Under the Affordable Care Act (ACA), individuals seeking health insurance coverage through a Marketplace are assessed for eligibility for an advanced payment of the premium tax credit (APTC) based on projected annual income. When eligible individuals file federal income taxes at the end of the year, the Internal Revenue Service (IRS) will reconcile the premium tax credit received based on estimated annual income with what should have been received based on actual income. In many instances, projected annual income may differ from actual income, which can result in a refundable credit or the need to pay back excess premium tax credits. This issue brief, prepared by Manatt Health Solutions, presents specific scenarios and addresses questions raised by states about the federal requirements that apply to premium tax credit eligibility when actual income at year-end differs from projected annual income.