Premium Tax Credit Eligibility & Determining Factors

Milton Boothe

To be eligible for the Premium Tax Credit under the Affordable Care Act, all of the following must apply:

• Your income must be between 100% and 400% of Federal Poverty Line (see below) for a given family size.

• You cannot be claimed as a dependent.

• If married, you must file a joint return (although some exceptions may apply).

• You must be enrolled in a qualified health plan through Marketplace.

• Cannot be eligible for other minimum essential coverage.

• Premiums must be paid.

The Federal Poverty Line (FPL)

The federal poverty line (FPL) is an income amount determined by the U.S. Department of Health and Human Services (HHS), which is adjusted for family size and considered the poverty level for the year. The HHS determines the federal poverty line amounts annually and publishes a table reflecting these amounts at the beginning of each calendar year.

The HHS provides three federal poverty lines:

• One for residents of the 48 contiguous states and D.C.,
• One for Alaska residents, and
• One for Hawaii residents.

The federal poverty line (FPL) is the indicator used to determine if you are eligible for the Premium Tax Credit; and if you are eligible, how much of the credit you will be eligible for.

For your 2015 tax returns, the 2014 federal poverty line amounts will be used in the calculation of the credit.

The calculation for the credit is based on the following:

• One individual: $11,670 (100% FPL) — $46,680 (400% FPL)
• Family of two: $15,730 (100% FPL) — $62,920 (400% FPL)
• Family of four: $23,850 (100% FPL) — $95,400 (400% FPL)

The size of the Premium Tax Credit is calculated on a sliding scale basis. Therefore, a taxpayer with household income at 200 percent of the FPL for the taxpayer’s family size will get a larger credit to help cover the cost of insurance, than a taxpayer with the same family size who has household income at 300 percent of the FPL. In other words, the higher the household income, the lower the amount of the credit.

The primary objective of this article is to empower taxpayers with tax knowledge. For more information on the Affordable Care Act, grab yourself a copy of “Doing Your Own Taxes is as Easy as 1, 2, 3” ($6.98) on

Milton G Boothe is an IRS Enrolled Agent with over twenty years of tax and financial accounting experience, including several years at PricewaterhouseCoopers. He is also a British certified Chartered Accountant. He is currently employed in private tax practices where he helps people resolve their tax problems, minimize their taxes, and routinely represents the interests of taxpayers before the Internal Revenue Service. As an Enrolled Agent (EA) Boothe is a federally-authorized tax practitioner who has technical expertise in the field of taxation and who is empowered by the U.S. Department of the Treasury to represent taxpayers before all administrative levels of the IRS for audits, collections, and appeals.
Milton G Boothe is also the author of several tax publications, wherein he encourages people to empower themselves by learning to do their own taxes.

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