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How do tax credits to buy coverage through the Health Insurance Marketplace work?


Consumers who qualify for the tax credits can use them at any time – they don't have to wait until they file their taxes. The advance payment is sent by the federal government to the insurance company that a consumer chooses and is used to reduce the monthly insurance premium. Consumers also have the choice to wait to use their tax credits until they file their taxes. They also can use just part of their estimated tax credit in advance.

Consumers who want to use their tax credit in advance need to be as accurate as possible to estimate how much income they expect to have in the coming year. If they underestimate their income and the tax credit is overestimated, they may have to repay part of their tax credits at tax time.

Consumers need to update the Health Insurance Marketplace during the year with any changes in income, family size (like having a baby), or employment (like getting a job where health insurance coverage is offered). The Health Insurance Marketplace will change the tax credit amount to reflect the new information. A consumer who forgets to update the Health Insurance Marketplace might owe money at tax time or realize they could have been using a larger tax credit amount in advance.

Consumers who don't use the tax credit in advance don't have to tell the Health Insurance Marketplace about any changes to their income, or employment during the year. They can get the tax credit on their tax returns.

Consumers may go to the Health Insurance Marketplace website HealthCare.gov, or call the Marketplace at 800-318-2596 for more information about tax credits. Agents, navigators, and certified application counselors, insurance agents are also able to give consumers information about the tax credit. There's more information about premium tax credits on the federal website at HealthCare.gov.

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