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Advance Premium Tax Credits

The Affordable Care Act (ACA) provides a federal tax credit to help you afford health coverage purchased through the Connect for Health Colorado marketplace. These tax credits are not available to people eligible for Health First Colorado (Medicaid) or Medicare or who have affordable coverage through an employer.

Also, ACA federal tax credits are not available to those who purchase health insurance directly from  insurance companies. Generally speaking, if you think your income will be below the threshold or may be relatively near the maximum tax credit threshold you may want to purchase your health insurance through Connect for Health Colorado so you have the opportunity to get a tax credit, should your actual income wind up falling below the threshold.

Advance Premium Tax Credits provide financial relief by lowering monthly premium costs for those who qualify.   The ACA’s federal tax credits are based upon your tax household’s Modified Adjusted Gross Income (MAGI).

Advanced Premium Tax Credits are based upon estimates of your tax household’s MAGI and those income estimates are later reconciled against your tax household’s actual MAGI when you file your federal tax return using IRS form 1095-A.

  • If your tax household’s actual income is lower than the estimated income used to determine your Advanced Premium Tax Credits, then you’ll get the difference as a refundable credit when you file your federal income tax return.
  • Conversely, if your tax household’s actual income is higher than the estimated income used to determine your Advanced Premium Tax Credits are more than the amount of your credit, you must repay the excess advance payments with your tax return.

It is sometimes difficult to estimate your tax household’s Modified Adjusted Gross Income, so some people estimate your income higher to take a reduced Advance Premium Tax Credit in case their income is higher than they expected.

Or you retain the option to choose not to take this tax credit in advance.  If you do not apply for financial assistance when you enroll in a Marketplace plan, you may qualify for a tax credit when you file your federal tax return.  If so, this money is provided to you at the end of the year as a refund or reduction in the amount of taxes owed when you file your federal tax return.

You can download your 1095-A form from the “My Documents” section in your Connect for Health Colorado Account.  1095-A forms are generally available at the end of January for the prior tax year.

Our Agents are certified by Connect for Health Colorado and can help you apply for any tax credits your eligible for and select a private insurance carrier and plan.  Get a free quote today and we’ll be happy to answer all your questions.