Health Insurance Premium Tax Credit and Cost-Sharing Reductions
Changes from February 14, 2024 to February 19, 2025
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Health Insurance Premium Tax Credit and
February 14, 2024
Cost-Sharing Reductions
Bernadette Fernandez
Cost-Sharing Reductions
Updated February 19, 2025
(R44425)
Jump to Main Text of Report
Certain individuals without access to subsidized health insurance coverage may be
Specialist in Health Care
eligible for the premium tax credit (PTC)eligible for the premium tax credit (PTC). The PTC was established under the Patient Protection and established under the Patient Protection and
Financing
Affordable Care Act (ACA; P.L. 111-148, as amended) and Affordable Care Act (ACA; P.L. 111-148, as amended) and was amended under the amended under the
American Rescue Plan Act of 2021 (ARPA, P.L. 117-2) and the enacted American Rescue Plan Act of 2021 (ARPA, P.L. 117-2) and the enacted FY2022 budget budget
reconciliation measure (P.L. 117-169reconciliation measure (P.L. 117-169) (; commonly referred to as the Inflation Reduction commonly referred to as the Inflation Reduction
Act) to include several temporary provisions. The dollar amount of the PTC varies from individual to individual, Act) to include several temporary provisions. The dollar amount of the PTC varies from individual to individual,
based on a formula specified in statute. Individuals who are eligible for the PTC may be required to contribute based on a formula specified in statute. Individuals who are eligible for the PTC may be required to contribute
some amount toward the purchase of private health insurance.some amount toward the purchase of private health insurance.
To be eligible to receive the premium tax credit in To be eligible to receive the premium tax credit in 20242025, individuals must have annual household income at or , individuals must have annual household income at or
above 100% of the federal poverty level; not be eligible for certain types of health insurance coverage, with above 100% of the federal poverty level; not be eligible for certain types of health insurance coverage, with
exceptions; file federal income tax returns; and enroll in a plan through an individual exchange. Exchanges (or exceptions; file federal income tax returns; and enroll in a plan through an individual exchange. Exchanges (or
marketplaces) are not insurance companies; rather, exchanges serve as marketplaces for the purchase of private marketplaces) are not insurance companies; rather, exchanges serve as marketplaces for the purchase of private
health insurance.health insurance.
The PTC is refundableThe PTC is refundable, so individuals may claim the full credit amount when filing their taxes, even if they have so individuals may claim the full credit amount when filing their taxes, even if they have
little or no federal income tax liability. The credit also is advanceablelittle or no federal income tax liability. The credit also is advanceable, so individuals may choose to receive so individuals may choose to receive
advanced payments of the credit (or APTC). APTCs are provided on a monthly basis to coincide with the payment advanced payments of the credit (or APTC). APTCs are provided on a monthly basis to coincide with the payment
of insurance premiums, automatically reducing consumer costs associated with purchasing insurance. The credit of insurance premiums, automatically reducing consumer costs associated with purchasing insurance. The credit
is financed through permanent appropriationsis financed through permanent appropriations authorized under the federal tax code.
.
Individuals who receive premium Individuals who receive premium tax credit payments also may be eligible for subsidies that reduce cost-sharing credit payments also may be eligible for subsidies that reduce cost-sharing
expenses. The ACA established two types of cost-sharing reductions (CSRs). One type of subsidy reduces annual expenses. The ACA established two types of cost-sharing reductions (CSRs). One type of subsidy reduces annual
cost-sharing limits; the other directly reduces cost-sharing requirements (e.g., lowers a deductible). Individuals cost-sharing limits; the other directly reduces cost-sharing requirements (e.g., lowers a deductible). Individuals
who are eligible for CSRs may receive both types.who are eligible for CSRs may receive both types.
The ARPA made temporary changes to the PTC and to CSRs. Of those temporary changes, one provision The ARPA made temporary changes to the PTC and to CSRs. Of those temporary changes, one provision
expanded eligibility for the PTC and increased the credit amount for tax years 2021 and 2022.expanded eligibility for the PTC and increased the credit amount for tax years 2021 and 2022.
The
The FY2022 budget reconciliation measure extended the ARPA provisions for three budget reconciliation measure extended the ARPA provisions for three additional years to sunset at the end of tax year years to sunset at the end of tax year
2025.2025.
This report describes current law and applicable regulations and guidance, specifically with regard to how the PTC and CSR This report describes current law and applicable regulations and guidance, specifically with regard to how the PTC and CSR
requirements apply in 2024.
Congressional Research Service
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Contents
Background ..................................................................................................................................... 1
Premium Tax Credit ........................................................................................................................ 2
Eligibility .................................................................................................................................. 2
File Federal Income Tax Returns ........................................................................................ 3
Enroll in a Plan Through an Individual Exchange .............................................................. 3
Have Annual Household Income at or Above 100% of the Federal Poverty Level ............ 4
Not Eligible for Minimum Essential Coverage ................................................................... 5
Determination of Required Premium Contributions and Premium Tax Credit Amounts .......... 6
Required Premium Contribution Examples ........................................................................ 6
Reconciliation of Advance Premium Tax Credit Payments ...................................................... 8
Preliminary Tax Credit Data ..................................................................................................... 9
Tax Year 2020 ..................................................................................................................... 9
Enrollment Data ...................................................................................................................... 10
Cost-Sharing Reductions ............................................................................................................... 10
Reduction in Annual Cost-Sharing Limits .............................................................................. 10
Reduction in Cost-Sharing Requirements ................................................................................ 11
Figures
Figure 1. Cap on Required Premium Contributions for Individuals Who Are Eligible for
the Premium Tax Credit in 2024 .................................................................................................. 7
Tables
Table 1. Income Levels Applicable to Eligibility for the Premium Tax Credit for 2024, by
Selected Family Sizes ................................................................................................................... 4
Table 2. Annual Repayment Limits of Excess Premium Tax Credit Payments, 2024 ..................... 9
Table 3. ACA Cost-Sharing Reductions: Reduced Annual Cost-Sharing Limits, 2024 ................. 11
Table 4. ACA Cost-Sharing Reductions: Increased Actuarial Values ............................................. 11
Contacts
Author Information ........................................................................................................................ 12
Congressional Research Service
Health Insurance Premium Tax Credit and Cost-Sharing Reductions
requirements apply in 2025. Temporary Amendments to the Premium Tax Credit
The American Rescue Plan Act of 2021 (ARPA; P.L. 117-2) made temporary changes to the premium tax The American Rescue Plan Act of 2021 (ARPA; P.L. 117-2) made temporary changes to the premium tax
credit (PTC) and cost-sharing reductions (CSRs). Of those temporary changes, one provision expanded credit (PTC) and cost-sharing reductions (CSRs). Of those temporary changes, one provision expanded
eligibility for and the amount of the PTC for tax years 2021 and 2022.eligibility for and the amount of the PTC for tax years 2021 and 2022.
Other ARPA changes to the PTC and CSRs that have expired include the provisions thatOther ARPA changes to the PTC and CSRs that have expired include the provisions that
•
suspended the requirement, for tax year 2020, that individuals pay back PTC amounts that were suspended the requirement, for tax year 2020, that individuals pay back PTC amounts that were
provided in excessprovided in excess, and and
•
expanded eligibility for and the calculation of both the PTC and CSRs for individuals who expanded eligibility for and the calculation of both the PTC and CSRs for individuals who receive
received unemployment compensation during calendar year 2021.unemployment compensation during calendar year 2021.
TheThe FY2022 budget reconciliation measure enacted on August 16, 2022 (P.L. 117-169 budget reconciliation measure enacted on August 16, 2022 (P.L. 117-169) (; commonly referred to as commonly referred to as
the Inflation Reduction Act) makes temporary changes to the PTC. The measure extends the ARPA the Inflation Reduction Act) makes temporary changes to the PTC. The measure extends the ARPA
provision that expanded eligibility for and the amount of the PTC. It extends this provision for three provision that expanded eligibility for and the amount of the PTC. It extends this provision for three additional years years
to sunset at the end of tax year 2025. The enhanced PTC extension under the reconciliation measure, like to sunset at the end of tax year 2025. The enhanced PTC extension under the reconciliation measure, like
ARPA, provides ARPA, providesful full premium subsidies (toward benchmark exchange plans) to PTC-eligible households premium subsidies (toward benchmark exchange plans) to PTC-eligible households
with annual incomes between 100% and 150% of the federal poverty level (FPL). Eligible individuals and with annual incomes between 100% and 150% of the federal poverty level (FPL). Eligible individuals and
families with higher incomes may receive partial subsidies for such plans. For all eligible households with families with higher incomes may receive partial subsidies for such plans. For all eligible households with
incomes at or above 400% of FPL, each such household would be required to spend up to 8.5% of their incomes at or above 400% of FPL, each such household would be required to spend up to 8.5% of their
income (prorated monthly) before receiving any credit. For some higher-income households, this results in income (prorated monthly) before receiving any credit. For some higher-income households, this results in
receiving no credit despite being receiving no credit despite beingeligible.
otherwise eligible. This report describes current law and applicable regulations and guidance, specifically how the PTC and This report describes current law and applicable regulations and guidance, specifically how the PTC and
CSR requirements apply in CSR requirements apply in20242025, and includes historical , and includes historical enrol mentenrollment and spending data. and spending data.
Sources: 26 U.S.C. 36B(b)(3)(A)( 26 U.S.C. 36B(b)(3)(A)(i iiii) and (c)(1)(E); and CRS Report R46777, ) and (c)(1)(E); and CRS Report R46777, American Rescue Plan Act of
2021 (P.L. 117-2): Private Health Insurance, Medicaid, CHIP, and Medicare Provisions..
Background
Certain individuals and families without access to subsidized health insurance coverage may be Certain individuals and families without access to subsidized health insurance coverage may be
eligible for a premium tax credit (PTC). This crediteligible for a premium tax credit (PTC). This credit, applies toward the cost of purchasing specific types of health plans offered by private health insurance companies. It was authorized under the Patient Protection and authorized under the Patient Protection and
Affordable Care Act (ACA; P.L. 111-148, as amended) and Affordable Care Act (ACA; P.L. 111-148, as amended) and was amended under the American Rescue amended under the American Rescue
Plan Act of 2021 (ARPA; P.L. 117-2) and the enacted Plan Act of 2021 (ARPA; P.L. 117-2) and the enacted FY2022 budget reconciliation measure (P.L. 117-budget reconciliation measure (P.L. 117-
169) (169; commonly referred to as the Inflation Reduction Act)commonly referred to as the Inflation Reduction Act), applies toward the cost of purchasing
specific types of health plans offered by private health insurance companies.1.1 Individuals who Individuals who
receive PTC payments also may be eligible for subsidies that reduce cost-sharing expenses.receive PTC payments also may be eligible for subsidies that reduce cost-sharing expenses.22
To be eligible for the PTC and cost-sharing reductions (CSRs), individuals and families must To be eligible for the PTC and cost-sharing reductions (CSRs), individuals and families must
enroll in health plans offered through health insurance exchanges and meet other criteria. enroll in health plans offered through health insurance exchanges and meet other criteria.
Exchanges operate in every state and the District of Columbia (DC).Exchanges operate in every state and the District of Columbia (DC).33 Exchanges are not Exchanges are not
insurance companies; rather, they are marketplaces that offer private health plans to qualified insurance companies; rather, they are marketplaces that offer private health plans to qualified
individuals and small businesses. The ACA specifically requires exchanges to offer insurance individuals and small businesses. The ACA specifically requires exchanges to offer insurance
options to individuals and to small businesses, so exchanges are structured to assist these two options to individuals and to small businesses, so exchanges are structured to assist these two
different types of customers. Consequently, each state has one exchange to serve individuals and different types of customers. Consequently, each state has one exchange to serve individuals and
1 §1401 of the Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended); new §36B of the Internal
Revenue Code of 1986 (IRC); §§9661-9663 of the American Rescue Plan Act of 2021 (ARPA, P.L. 117-2); and
§12001 of the enacted budget reconciliation measure (P.L. 117-169).
2 ACA §1402; and new §18071 of the Public Health Service Act (PHSA).
3 The ACA also gave the territories the option of establishing exchanges, but none elected to do so by the statutory
deadline of October 1, 2013. For additional background about the exchanges, see CRS Report R44065, Overview of
Health Insurance Exchanges.
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families (an families (an individual exchange) and another to serve small businesses (a ) and another to serve small businesses (a Small Business Health
Options Program, or , or SHOP, exchange).).
Health insurance companies that participate in the individual and SHOP exchanges must comply Health insurance companies that participate in the individual and SHOP exchanges must comply
with numerous federal and state requirements. Among such requirements are restrictions related with numerous federal and state requirements. Among such requirements are restrictions related
to the determination of premiums for exchange plans (to the determination of premiums for exchange plans (rating restrictions). Insurance companies ). Insurance companies
are prohibited from using health factors in determining premiums. However, they are allowed to are prohibited from using health factors in determining premiums. However, they are allowed to
vary premiums by age (within specified limits), geography, number of individuals enrolling in a vary premiums by age (within specified limits), geography, number of individuals enrolling in a
plan, and smoking status (within specified limits).plan, and smoking status (within specified limits).44
Premium Tax Credit
The dollar amount of the PTC is based on a statutory formula and varies for each individual. The dollar amount of the PTC is based on a statutory formula and varies for each individual.
Individuals who are eligible for the premium credit generally are required to contribute some Individuals who are eligible for the premium credit generally are required to contribute some
amount toward the purchase of their health insurance.amount toward the purchase of their health insurance.
The PTC is refundableThe PTC is refundable, so individuals may claim the full credit amount when filing their taxes so individuals may claim the full credit amount when filing their taxes
even if they have little or no federal income tax liability. The credit also is advanceableeven if they have little or no federal income tax liability. The credit also is advanceable, so so
individuals may choose to receive the credit in advance of filing taxes individuals may choose to receive the credit in advance of filing taxes and on a monthly basis to on a monthly basis to
coincide with the payment of insurance premiums (technically, advance payments go directly to coincide with the payment of insurance premiums (technically, advance payments go directly to
insurers). Advance payments (or APTC) automatically reduce monthly premiums by the credit insurers). Advance payments (or APTC) automatically reduce monthly premiums by the credit
amount. Therefore, the direct cost of insurance to an individual or family that is receiving APTC amount. Therefore, the direct cost of insurance to an individual or family that is receiving APTC
payments generally will be lower than the advertised cost for a given exchange plan.payments generally will be lower than the advertised cost for a given exchange plan.
Eligibility
The PTC is financed through a permanent appropriation through Title 31 of the United States Code, which provides indefinite budget authority for PTC/APTC disbursements (31 U.S.C. 1324). Eligibility To be eligible to receive the PTC, individuals must meet the following criteria:To be eligible to receive the PTC, individuals must meet the following criteria:
• file federal income tax returns;file federal income tax returns;
•
enroll in a plan through an individual exchange;enroll in a plan through an individual exchange;
•
have annual household income at or above 100% of the federal poverty level have annual household income at or above 100% of the federal poverty level
(FPL)(FPL)55 for tax year for tax year 2024;6 and
• 2025;6 and
not be eligible for minimum essential coverage (see be eligible for minimum essential coverage (see the “the "Not Eligible for
Minimum Essential Coverage” section" section in this report), with exceptions. in this report), with exceptions.
These eligibility criteria are discussed in greater detail below.
File Federal Income Tax Returns
These eligibility criteria are discussed in greater detail below.
4 For additional discussion regarding these rating restrictions, see CRS Report R45146, Federal Requirements on
Private Health Insurance Plans.
5 Household income is measured according to the definition for modified adjusted gross income (MAGI); see the
“Have Annual Household Income at or Above 100% of the Federal Poverty Level” section of this report. The
guidelines that designate the federal poverty level (FPL) are used in various federal programs for eligibility purposes.
The poverty guidelines vary by family size and by whether the individual resides in the 48 contiguous states and the
District of Columbia, Alaska, or Hawaii. See Office of the Assistant Secretary for Planning and Evaluation,
“Frequently Asked Questions Related to the Poverty Guidelines and Poverty,” at https://aspe.hhs.gov/frequently-asked-
questions-related-poverty-guidelines-and-poverty#programs.
6 ARPA §9661 expanded eligibility for the premium tax credit (PTC) by temporarily eliminating the phaseout for
households with annual incomes above 400% of FPL. Elimination of the phaseout applied to tax years 2021 and 2022
under ARPA. §12001 of the enacted budget reconciliation measure (P.L. 117-169) extends the APRA provision
through the end of tax year 2025. The phaseout would resume beginning in tax year 2026.
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Health Insurance Premium Tax Credit and Cost-Sharing Reductions
File Federal Income Tax Returns
Because premium assistance is provided in the form of a tax credit, such assistance is Because premium assistance is provided in the form of a tax credit, such assistance is
administered by the Internal Revenue Service (IRS) through the federal tax system. The premium administered by the Internal Revenue Service (IRS) through the federal tax system. The premium
credit process requires qualifying individuals to file federal income tax returns, even if their credit process requires qualifying individuals to file federal income tax returns, even if their
incomes are at levels that normally do not necessitate the filing of such returns.incomes are at levels that normally do not necessitate the filing of such returns.
Married couples are required to file joint tax returns to claim the premium credit, with some Married couples are required to file joint tax returns to claim the premium credit, with some
exceptions. The calculation and allocation of credit amounts may differ in the event of a change exceptions. The calculation and allocation of credit amounts may differ in the event of a change
in tax-filing status during a given year (e.g., individuals who marry or divorce).in tax-filing status during a given year (e.g., individuals who marry or divorce).77
Enroll in a Plan Through an Individual Exchange
The PTC is available only through individual
exchanges; the credit is not available through
Actuarial Value and Metal Plans
SHOP exchanges. Individuals may enroll in
Most health plans sold through exchanges established
exchange plans if they (1) reside in a state in
under the ACA are required to meet actuarial value
which an exchange was established; (2) are
Most health plans sold through exchanges established under the ACA are required to meet actuarial value (AV) standards, among other requirements. AV is a (AV) standards, among other requirements. AV is a
not incarcerated, except individuals in
summary measure of a plansummary measure of a plan’'s generosity, expressed as s generosity, expressed as
custody pending the disposition of charges;
the percentage of medical expenses estimated to be paid the percentage of medical expenses estimated to be paid
and (3) are citizens or have other lawful
by the insurer for a standard population and set of by the insurer for a standard population and set of
allowed charges. allowed charges.In other words, the higher the
status.
The higher the percentage, the lower the cost sharing, on average, for percentage, the lower the cost sharing, on average, for
Undocumented individuals (individuals
the population. AV is not a measure of plan generosity the population. AV is not a measure of plan generosity
for an for anenrol edenrolled individual or family, nor is it a measure of individual or family, nor is it a measure of
without proper documentation for legal
premiums or benefits packages.premiums or benefits packages.
residence) are prohibited from purchasing
An exchange plan that is subject to the AV standards is An exchange plan that is subject to the AV standards is
coverage through an exchange, even if they
given a precious metal designation to help consumers
could pay the entire premium. Because the
understand the approximate level of coverage (and,
ACA prohibits undocumented individuals
inversely,given a precious metal designation to help consumers understand the approximate level of coverage (and inversely the cost sharing) they can expect from the cost sharing) they can expect from
from obtaining exchange coverage, these
different plans: platinum (AV of 90%), gold (80%), silver different plans: platinum (AV of 90%), gold (80%), silver
(70%), or bronze (60%).(70%), or bronze (60%).
The PTC is available only to eligible enrollees in plans sold through individual exchanges; this credit is not available through SHOP exchanges. Individuals may enroll in exchange plans if they (1) reside in a state in which an exchange was established; (2) are not incarcerated (except individuals in custody pending the disposition of charges); and (3) are U.S. citizens, U.S. nationals or lawfully present residents. 8
Undocumented individuals (individuals without proper immigration documentation for legal residence) are prohibited from purchasing coverage through an exchange, even if they could pay the entire premium. Because the ACA prohibits undocumented individuals from obtaining exchange coverage, these individuals are not eligible for the PTC. individuals are not eligible for the PTC.
Although certain individuals are not eligible Although certain individuals are not eligible
to enroll in exchanges due to incarceration or immigration status, their family members may still to enroll in exchanges due to incarceration or immigration status, their family members may still
receive the PTC as long as those family members meet all eligibility criteria.receive the PTC as long as those family members meet all eligibility criteria.
Generally, enrollment through individual exchanges is restricted to a certain time period: an open Generally, enrollment through individual exchanges is restricted to a certain time period: an open
enrollment period (OEP). The OEP for exchanges occurs near the end of a given calendar year for enrollment period (OEP). The OEP for exchanges occurs near the end of a given calendar year for
enrollment into health plans that begin the following year. Under certain circumstances, enrollment into health plans that begin the following year. Under certain circumstances,
individuals may enroll in exchange plans outside of the OEP during a special enrollment period individuals may enroll in exchange plans outside of the OEP during a special enrollment period
(SEP).8
7 See IRS, “Health Insurance Premium Tax Credit: Final Regulations,” 77 Federal Register 30377, May 23, 2012.
8 For individuals who experience a “triggering event” during the plan year, exchanges are required to provide an SEP to
allow such individuals the option of enrolling into an exchange for that plan year. SEP rules are specified at 45 C.F.R.
155.420, at https://www.govinfo.gov/content/pkg/CFR-2013-title45-vol1/xml/CFR-2013-title45-vol1-sec155-420.xml.
The ACA provides a specific SEP to members of Indian tribes. Such individuals may enroll in an exchange plan and
switch exchange plans on a monthly basis. ACA §1311(c)(6)(D).
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(SEP).9 Have Annual Household Income at or Above 100% of the Federal Poverty
Level
Level
Individuals generally must have household income (based on FPL) that meets a minimum level to Individuals generally must have household income (based on FPL) that meets a minimum level to
be eligible for the PTC in be eligible for the PTC in2024.92025.10 Household income is measured according to the definition for Household income is measured according to the definition for
modified adjusted gross income (MAGI).modified adjusted gross income (MAGI).1011 An individual whose MAGI is at or above 100% of An individual whose MAGI is at or above 100% of
FPL may be eligible to receive the PTC for tax year FPL may be eligible to receive the PTC for tax year2024.11
2025.12 Table 1 displays the income levels equivalent to 100% of FPL, for the location and size of family, displays the income levels equivalent to 100% of FPL, for the location and size of family,
that correspond to the eligibility criteria for the PTC in that correspond to the eligibility criteria for the PTC in20242025 (using poverty guidelines updated by (using poverty guidelines updated by
the Department of Health and Human Services [HHS] for the Department of Health and Human Services [HHS] for2023).12
2024).13 Table 1. Minimum Income Levels Applicable to Eligibility for the Premium Tax Credit for2024,
2025, by Selected Family Sizes
(based on (based on 20232024 HHS poverty guidelines) HHS poverty guidelines)
Number of Persons in Family Income Levels Equivalent to 100% of FPL
Number of
Persons
48 Contiguous States
in Family
and DC
Alaska
Hawaii
1
$14,580
$18,210
$16,770
2
$19,720
$24,640
$22,680
3
$24,860
$31,070
$28,590
4
$30,000
$37,500
$34,500
and DC
Source: Department of Health and Human Services (HHS), Department of Health and Human Services (HHS), “"Annual Update of the HHS Poverty Guidelines,Annual Update of the HHS Poverty Guidelines,” 88" 89
Federal Register34242961, January , January 19, 2023, athttps17, 2024, at https://www.govinfo.gov/content/pkg/://www.govinfo.gov/content/pkg/FR-2024-01-17/pdf/2024-00796.pdf.
FR-2023-01-19/pdf/2023-
00885.pdf.
Notes: For For20242025, the income levels used to calculate premium credit eligibility and amounts are based on , the income levels used to calculate premium credit eligibility and amounts are based on 2023
2024 HHS poverty guidelines. The poverty guidelines represent annual incomes for families HHS poverty guidelines. The poverty guidelines represent annual incomes for familieswith up to eight members
of different sizes and are updated annually for inflation. FPL = Federal Poverty Level. DC = District of Columbia. Not Eligible for Minimum Essential Coverageand are updated annually for inflation. DC = District of Columbia; FPL = federal poverty level.
9 There are exceptions to the lower bound income threshold at 100% of FPL. One exception relates to the state option
under the ACA to expand Medicaid for individuals with income up to 138% of FPL. If a state chooses to undertake the
ACA Medicaid expansion (or has already expanded Medicaid above 100% of FPL), eligibility for the premium tax
credit would begin above the income level at which Medicaid eligibility ends in such a state. (Note that in states that do
not expand Medicaid to at least 100% of FPL, some low-income residents in those states are ineligible for both the
credit and Medicaid.) Another exception is for lawfully present aliens with incomes below 100% of FPL, who are not
eligible for Medicaid for the first five years that they are lawfully present. The ACA established §36B(c)(1)(B) of the
IRC to allow such lawfully present aliens to be eligible for the credit. Lastly, the final rule on the premium tax credit
provided a special rule for credit recipients whose incomes at the end of a given tax year end up being less than 100%
of FPL. Such individuals will continue to be considered eligible for the PTC for that tax year.
10 See CRS Report R43861, The Use of Modified Adjusted Gross Income (MAGI) in Federal Health Programs, for
background information about the use of MAGI in determining eligibility for the premium tax credit.
11 ARPA §9661 expanded eligibility for the PTC by temporarily eliminating the phaseout for households with annual
incomes above 400% of FPL. Elimination of the phaseout applied to tax years 2021 and 2022 under ARPA. §12001 the
enacted budget reconciliation measure (P.L. 117-169) extends the APRA provision through the end of tax year 2025.
The phaseout would resume beginning in tax year 2026.
12 The poverty guidelines are updated annually at the beginning of the year. However, premium credit calculations are
based on the prior year’s guidelines to provide individuals with timely information as they compare and enroll in
exchange plans during the OEP (which occurs prior to the beginning of the plan year).
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Health Insurance Premium Tax Credit and Cost-Sharing Reductions
Not Eligible for Minimum Essential Coverage
To be eligible for a premium credit, an individual may To be eligible for a premium credit, an individual may not be eligible for be eligible for minimum essential
coverage (MEC), with exceptions (described below). The ACA broadly defines MEC to include (MEC), with exceptions (described below). The ACA broadly defines MEC to include
Medicare Part A; Medicare Advantage; Medicaid (with exceptions); the State ChildrenMedicare Part A; Medicare Advantage; Medicaid (with exceptions); the State Children’'s Health s Health
Insurance Program (CHIP); Tricare; Tricare for Life, a health care program administered by the Insurance Program (CHIP); Tricare; Tricare for Life, a health care program administered by the
Department of Veterans Affairs; coverage provided through the Peace Corps program; any Department of Veterans Affairs; coverage provided through the Peace Corps program; any
government plan (local, state, federal), including the Federal Employees Health Benefits Program government plan (local, state, federal), including the Federal Employees Health Benefits Program
(FEHBP); any plan offered in the individual health insurance market; any employer-sponsored (FEHBP); any plan offered in the individual health insurance market; any employer-sponsored
plan (including group plans regulated by a foreign government); any grandfathered health plan; plan (including group plans regulated by a foreign government); any grandfathered health plan;
any qualified health plan offered inside or outside of exchanges; and any other coverage (such as any qualified health plan offered inside or outside of exchanges; and any other coverage (such as
a state high-risk pool) recognized by the HHS Secretary.a state high-risk pool) recognized by the HHS Secretary.13
14
However, the ACA provides certain exceptions regarding eligibility for MEC and PTC. However, the ACA provides certain exceptions regarding eligibility for MEC and PTC. An
Notwithstanding the above MEC restrictions, an individual may be eligible for the credit even if he or she is eligible for any of the following individual may be eligible for the credit even if he or she is eligible for any of the following
sources of MEC:sources of MEC:
• the individual (nongroup) health insurance market;the individual (nongroup) health insurance market;14
• 15
an employer-sponsored health plan that is either an employer-sponsored health plan that is either unaffordable15unaffordable16 or inadequate; or inadequate;16
or
• 17 or
limited benefits under the Medicaid program.limited benefits under the Medicaid program.17
18With respect to the exception provided when employer-sponsored plans are unaffordable or With respect to the exception provided when employer-sponsored plans are unaffordable or
inadequate, the Biden Administration promulgated a final rule that clarified implementation of inadequate, the Biden Administration promulgated a final rule that clarified implementation of
this exception.this exception.1819 Under the rule, the eligibility determination process considers family premiums Under the rule, the eligibility determination process considers family premiums
and cost-sharing requirements of employer plans to test for affordability and adequacy of such and cost-sharing requirements of employer plans to test for affordability and adequacy of such
plans to family members. plans to family members.Prior to the rule,Under the prior rule,20 the determination of family eligibility considered costs the determination of family eligibility considered costs
to the employee only even if the family was seeking coverage (this is referred to colloquially as to the employee only even if the family was seeking coverage (this is referred to colloquially as
the the“"family glitchfamily glitch”"). The previous exclusion of family costs in the eligibility determination ). The previous exclusion of family costs in the eligibility determination
process resulted in some family members being ineligible for the PTC even when employer process resulted in some family members being ineligible for the PTC even when employer
coverage is unaffordable to them, because the employee-only cost is determined to be affordable. coverage is unaffordable to them, because the employee-only cost is determined to be affordable.
The previous test of adequacy of family coverage likewise excluded family costs. Given the
changes to determining family eligibility (the employee-only eligibility determination process
will not change), the rule is expected to expand the total number of individuals who will qualify
for federal subsidies.19
13 See CRS Report R44438, The Individual Mandate for Health Insurance Coverage: In Brief.
14 The private health insurance market continues to exist outside of the ACA exchanges. Moreover, almost all exchange
plans may be offered in the market outside of exchanges.
15 For 2024, if the employee’s premium contribution toward the employer’s self-only plan exceeds 8.39% of household
income, such a plan is considered unaffordable for premium credit eligibility purposes. For additional information, see
IRS, Revenue Procedure 2023-29, at https://www.irs.gov/pub/irs-drop/rp-23-29.pdf.
16 If a plan’s actuarial value is less than 60%, the plan is considered inadequate for premium credit eligibility purposes.
17 Limited benefits under Medicaid include the pregnancy-related benefits package, treatment of emergency medical
conditions only, and other limited benefits.
18 87 Federal Register 61979, October 13, 2022, at https://www.federalregister.gov/documents/2022/10/13/2022-
22184/affordability-of-employer-coverage-for-family-members-of-employees.
19 For additional discussion about the final rule, see Katie Keith, “IRS Revises Family Glitch Rule Ahead Of 2023
Open Enrollment Period,” Health Affairs, October 12, 2022, at https://www.healthaffairs.org/content/forefront/irs-
revises-family-glitch-rule-ahead-2023-open-enrollment-period.
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Medicaid Expansion
The previous test of adequacy of family coverage likewise excluded family costs.
Medicaid Expansion
Under the ACA, states have the option to expand Medicaid eligibility to include all nonelderly, Under the ACA, states have the option to expand Medicaid eligibility to include all nonelderly,
nonpregnant individuals with incomes up to 138% of FPL.nonpregnant individuals with incomes up to 138% of FPL.2021 If an individual who applied for the If an individual who applied for the
premium credit through an exchange is determined to be eligible for Medicaid, the exchange must premium credit through an exchange is determined to be eligible for Medicaid, the exchange must
haveenroll that individual that individual enrolled in Medicaid instead of an exchange plan. Therefore, in states that in Medicaid instead of an exchange plan. Therefore, in states that
implemented the optional Medicaid expansion to include individuals with incomes at or above implemented the optional Medicaid expansion to include individuals with incomes at or above
100% of FPL (or any state that decided to expand eligibility to individuals irrespective of the 100% of FPL (or any state that decided to expand eligibility to individuals irrespective of the
ACA’ACA's Medicaid expansion provisions), premium credit eligibility begins at the income level at s Medicaid expansion provisions), premium credit eligibility begins at the income level at
which Medicaid eligibility ends.which Medicaid eligibility ends.21
22 Determination of Required Premium Contributions and Premium
Tax Credit Amounts
Required Premium Contribution Examples
The amount of the PTC varies from The amount of the PTC varies from individual to individualhousehold to household. Calculation of the credit is based on . Calculation of the credit is based on
the annual household income (i.e., MAGI) of the individual (and tax dependents), the premium the annual household income (i.e., MAGI) of the individual (and tax dependents), the premium
for the exchange plan in which the individual (and any for the exchange plan in which the individual (and any eligible dependents) is enrolled, and other dependents) is enrolled, and other
factors.factors.2223 For simplicity For simplicity’'s sake, the following formula illustrates the calculation of the credit:s sake, the following formula illustrates the calculation of the credit:
MaximumCreditCredit Amount = Benchmark Plan Premium – Required Premium Contribution
Premiums are allowed to vary based on a few characteristics of the person (or family) seeking Premiums are allowed to vary based on a few characteristics of the person (or family) seeking
health insurance (e.g., family size). For purposes of this report, health insurance (e.g., family size). For purposes of this report, BenchmarkPlanPlan premium refers premium refers
to the premium for the second-lowest-cost silver plan (see text box in to the premium for the second-lowest-cost silver plan (see text box inthe “Eligibility” section of
the "Eligibility" section of this report) in the personthis report) in the person’'s (or familys (or family’'s) local area. s) local area. Required Premium Contribution refers to the refers to the
amount that a premium amount that a premium tax credit-eligible individual (or family) may pay toward the exchange credit-eligible individual (or family) may pay toward the exchange
premium. The required premium contribution is capped according to household income, with premium. The required premium contribution is capped according to household income, with
such income measured relative to the federal poverty level (such income measured relative to the federal poverty level (seesee Table 1). As household income . As household income
increases, the share of income used to determine the required premium contribution also generally increases, the share of income used to determine the required premium contribution also generally
increases. The required premium contribution caps typically are updated through IRS guidance on
20 See CRS In Focus IF10399, Overview of the ACA Medicaid Expansion.
21 For a discussion concerning the interaction of Medicaid and PTC eligibility, see Medicaid and CHIP Payment and
Access Commission, “Background” section in Transitions Between Medicaid, CHIP, and Exchange Coverage, July
2022, at https://www.macpac.gov/wp-content/uploads/2022/07/Coverage-transitions-issue-brief.pdf. For recent
enrollment trend data across insurance affordability programs, see Centers for Medicare & Medicaid Services (CMS),
Medicaid, CHIP, and Marketplace Enrollments: Enrollment Trends Update, Dec. 18, 2023, at
https://www.medicaid.gov/sites/default/files/2023-12/medicaid-unwinding-enroll-trends-snapshot-sep2023.pdf. For a
map indicating state adoption of the ACA Medicaid expansion, see Kaiser Family Foundation (KFF), Status of State
Medicaid Expansion Decisions: Interactive Map, Feb. 7, 2024, at https://www.kff.org/affordable-care-act/issue-brief/
status-of-state-medicaid-expansion-decisions-interactive-map/. For exchange and PTC data by state, see CMS, 2023
Marketplace Open Enrollment Period Public Use Files, at https://www.cms.gov/data-research/statistics-trends-and-
reports/marketplace-products/2023-marketplace-open-enrollment-period-public-use-files.
22 The PTC calculation uses the benchmark plan premium for the individual or family seeking exchange coverage, as
long as such plan only provides coverage for the minimum level of benefits required under applicable federal law
(referred to as essential health benefits (EHBs)). To the extent that an exchange plan includes benefits beyond EHBs or
a state requires exchange plans to provide additional benefits, the portion of the premium attributable to such extra
benefits are disregarded for PTC purposes. In other words, the PTC calculation uses the premium amount allocable to
EHBs. See 26 U.S.C. 36B(b)(3)(D).
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Health Insurance Premium Tax Credit and Cost-Sharing Reductions
increases. The required premium contribution caps typically are updated through IRS guidance on an annual basis. However, the ARPA and the enacted an annual basis. However, the ARPA and the enacted FY2022 budget reconciliation measure temporarily budget reconciliation measure temporarily
replaced those caps (seereplaced those caps (see Figure 1).23
24
The maximum amount of the credit for a given individual is calculated as the difference between The maximum amount of the credit for a given individual is calculated as the difference between
the premium of the plan in which the individual enrolls and the required contribution. Given that the premium of the plan in which the individual enrolls and the required contribution. Given that
the premium and required contribution vary from person to person, the premium credit amount the premium and required contribution vary from person to person, the premium credit amount
likewise varies. An extreme example is likewise varies. An extreme example is that when the premium for the benchmark plan is very low, when the premium for the benchmark plan is very low,
the tax credit may cover the entire premium and the individual may pay nothing toward the the tax credit may cover the entire premium and the individual may pay nothing toward the
premium. The opposite extreme scenario, for some higher-income individuals, is when the premium. The opposite extreme scenario, for some higher-income individuals, is when the
required contribution exceeds the premium amount, leading to a credit of zero dollars, meaning required contribution exceeds the premium amount, leading to a credit of zero dollars, meaning
the PTC-eligible individual (or family) would pay the entire premium amount.the PTC-eligible individual (or family) would pay the entire premium amount.
In 2024
In 2025, eligible households with annual incomes between 100% and 150% of FPL receive full , eligible households with annual incomes between 100% and 150% of FPL receive full
premium subsidies (toward benchmark plans); eligible individuals with higher incomes may premium subsidies (toward benchmark plans); eligible individuals with higher incomes may
receive partial subsidies for such plans. For all eligible households with annual incomes at or receive partial subsidies for such plans. For all eligible households with annual incomes at or
above 400% of FPL, each such household would be required to spend up to 8.5% of their income above 400% of FPL, each such household would be required to spend up to 8.5% of their income
(prorated monthly) before receiving any credit. For some higher-income households, this results (prorated monthly) before receiving any credit. For some higher-income households, this results
in receiving no credit despite being eligible. Beginning in 2026, the percentages of income used in receiving no credit despite being eligible. Beginning in 2026, the percentages of income used
in the credit formula will revert back to the annual adjustment process established under the ACA.in the credit formula will revert back to the annual adjustment process established under the ACA.
for the Premium Tax Credit in 2024
2025
(cap varies by income, as measured relative to the federal poverty level)(cap varies by income, as measured relative to the federal poverty level)
Source: 26 U.S.C. 36B(b)(3)(A)(26 U.S.C. 36B(b)(3)(A)(i i).
iii). Notes: The cap assumes that the individual The cap assumes that the individualenrol senrolls in the benchmark plan (second-lowest-cost silver plan) used in the benchmark plan (second-lowest-cost silver plan) used
to calculate premium credit amounts. If the individual to calculate premium credit amounts. If the individualenrol senrolls in an exchange plan that is more expensive than the in an exchange plan that is more expensive than the
benchmark plan, the individual would be responsible for paying any premium amount that exceeds the calculated benchmark plan, the individual would be responsible for paying any premium amount that exceeds the calculated
credit amount. Section 9661 of the American Rescue Plan Act of 2021 (ARPA, P.L. 117-2) applied these credit amount. Section 9661 of the American Rescue Plan Act of 2021 (ARPA, P.L. 117-2) applied these
percentages to tax years 2021 and 2022. Section 12001 of the enacted percentages to tax years 2021 and 2022. Section 12001 of the enacted FY2022 budget reconciliation measure (P.L. 117-budget reconciliation measure (P.L. 117-
169169) extends the APRA provision through the end of tax year 2025. To illustrate the required premium contribution calculation for 2025, consider a premium tax credit) extends the APRA provision through the end of tax year 2025.
23 See ARPA §9661. The new percentages applied to the PTC for tax years 2021 and 2022. Under §12001 of the
enacted budget reconciliation measure (P.L. 117-169), these same percentages apply through the end of tax year 2025.
Beginning in tax year 2026, the annual update to these percentages would revert to pre-ARPA statute and applicable
IRS guidance.
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To illustrate the required premium contribution calculation for 2024, consider a premium credit
eligible individual living in Lebanon, KS—the geographic center of the continental United eligible individual living in Lebanon, KS—the geographic center of the continental United
States—with household income of $States—with household income of $21,87022,590 (150% of FPL, according to applicable regulations). (150% of FPL, according to applicable regulations).
For For20242025, such an individual would be required to contribute 0.0% of that income toward the , such an individual would be required to contribute 0.0% of that income toward the
premium for the benchmark plan in his or her local area (seepremium for the benchmark plan in his or her local area (see Figure 1). In other words, the . In other words, the
individual would have a zero-dollar premium if he or she enrolled in the benchmark plan. In individual would have a zero-dollar premium if he or she enrolled in the benchmark plan. In
contrast, an individual residing in the same area with income of $contrast, an individual residing in the same area with income of $36,45037,650 (250% of FPL) would be (250% of FPL) would be
required to contribute 4.0% of his or her income toward the premium for the same plan. The required to contribute 4.0% of his or her income toward the premium for the same plan. The
maximum amount this individual would pay for the benchmark plan would be $1,maximum amount this individual would pay for the benchmark plan would be $1,458506 (that is, (that is,
$36,450$37,650 x 4.0%) for the year or approximately $ x 4.0%) for the year or approximately $122126 per month. per month.24
25
A similar calculation is used to determine the required premium contribution for a family. For A similar calculation is used to determine the required premium contribution for a family. For
instance, consider a couple and one child residing in Lebanon, KS, who are eligible for the PTC instance, consider a couple and one child residing in Lebanon, KS, who are eligible for the PTC
with household income of $with household income of $37,290 in 202438,730 in 2025. For a family of this size, this income is equivalent to . For a family of this size, this income is equivalent to
150% of FPL for premium credit purposes. Just as in the example above of the individual with 150% of FPL for premium credit purposes. Just as in the example above of the individual with
income at 150% of FPL, this family would be required to contribute 0.0% of its annual income income at 150% of FPL, this family would be required to contribute 0.0% of its annual income
toward the premium for the benchmark plan in its local area. In contrast, a family residing in the toward the premium for the benchmark plan in its local area. In contrast, a family residing in the
same area with income of $same area with income of $62,15064,550 (250% of FPL) would be required to contribute 4.0% of its (250% of FPL) would be required to contribute 4.0% of its
income toward the premium for the same plan. The maximum amount this family would pay for income toward the premium for the same plan. The maximum amount this family would pay for
the benchmark plan would be $2,the benchmark plan would be $2,486 ($62,150582 ($64,550 x 4.0%) for the year (approximately $ x 4.0%) for the year (approximately $207215 per per
month).month).25
26
Generally, the arithmetic difference between the premium and the individualGenerally, the arithmetic difference between the premium and the individual’'s (or familys (or family’'s) s)
required contribution is the tax credit amount provided to the individual (or family). Therefore, required contribution is the tax credit amount provided to the individual (or family). Therefore,
factors that affect either the premium or the required contribution (or both) will change the factors that affect either the premium or the required contribution (or both) will change the
premium credit amount; such factors include age, family size, geographic location, and choice of premium credit amount; such factors include age, family size, geographic location, and choice of
metal plan.metal plan.
Reconciliation of Advance Premium Tax Credit Payments
As mentioned previously, an eligible individual (or family) may receive advance payments of the As mentioned previously, an eligible individual (or family) may receive advance payments of the
premium credit to coincide with insurance premiums due dates. For such an individual, the premium credit to coincide with insurance premiums due dates. For such an individual, the
advance premium tax credit (APTC) is provided on a monthly basis and the amount is calculated advance premium tax credit (APTC) is provided on a monthly basis and the amount is calculated
using an using an estimate of income. When an individual files his or her tax return for a given year, the of income. When an individual files his or her tax return for a given year, the
total amount of APTC he or she received in that tax year is reconciled with the amount he or she total amount of APTC he or she received in that tax year is reconciled with the amount he or she
should have received, based on should have received, based on actual income, as determined on the tax return. income, as determined on the tax return.
If an individualIf an individual’'s income s income decreased during the year and he or she should have received a larger during the year and he or she should have received a larger
tax credit, the additional credit amount will be included in the individualtax credit, the additional credit amount will be included in the individual’'s tax refund for the year s tax refund for the year
or used to reduce the amount of taxes owed. If an individualor used to reduce the amount of taxes owed. If an individual’'s income s income increased during the year during the year
and he or she received too much in APTC payments, the excess credit amount generally will be and he or she received too much in APTC payments, the excess credit amount generally will be
repaid in the form of a tax payment.
24 For estimates of premium credit amounts based on factors for which insurance companies are allowed to vary
premiums (as described in the “Background” section of this report), see KFF, “Health Insurance Marketplace
Calculator,” at http://kff.org/interactive/subsidy-calculator/.
25 The family in this hypothetical example illustrates the effect of family size and composition in a number of ways. For
example, premiums for a given plan may vary based on the number of family members and whether those family
members include adults, children, or both. Also, family size is incorporated into the HHS poverty guidelines. As
indicated in Table 1 of this report, the larger the family (up to eight family members), the larger the dollar amount
equivalent to the poverty level. Changes in premiums or income level would directly affect the calculation of a given
PTC.
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repaid in the form of a tax payment.
For individuals with incomes below 400% of FPL, any repayment amount is capped with greater For individuals with incomes below 400% of FPL, any repayment amount is capped with greater
tax relief provided to individuals with lower incomes (tax relief provided to individuals with lower incomes (seesee Table 2).
Table 2. Annual Repayment Limits of Excess Premium Tax Credit Payments,2024
2025 Household Income (Expressed as a Percentage
Applicable Dollar Limit for an
of the Federal Poverty Level)
Unmarried Individuala
<200%
$375
200% to <300%
$950
300% to <400%
$1,575
Source: IRS, Revenue Procedure 2023-34, at of the Federal Poverty Level)
Applicable Dollar Limit for an Unmarried Individuala
Source: IRS, Revenue Procedure 2024-40, at https://www.irs.gov/pub/irs-drop/https://www.irs.gov/pub/irs-drop/rp-24-40.pdf.
rp-23-34.pdf.
Notes: The applicable The applicabledol ardollar limit for all other tax filers is twice the limit for unmarried individuals. limit for all other tax filers is twice the limit for unmarried individuals.
a.
a. Does not include surviving spouses or heads of households.Does not include surviving spouses or heads of households.
Preliminary Tax Credit Data
The IRS has published preliminary data about the PTC in its annual The IRS has published preliminary data about the PTC in its annual“"Statistics of IncomeStatistics of Income”" (SOI) (SOI)
reports. The most recently published SOI report is for tax year reports. The most recently published SOI report is for tax year2020.262022.27 The following data provide The following data provide
summary statistics about two overlapping populations: tax households that received APTC, and summary statistics about two overlapping populations: tax households that received APTC, and
households that claimed the credit on their individual income tax returns.households that claimed the credit on their individual income tax returns.27
28 Tax Year2020
2022
For tax year For tax year 20202022, around , around 4.48.6 million tax returns indicated receipt of advance payments of the tax million tax returns indicated receipt of advance payments of the tax
credit totaling to almost $credit totaling to almost $32.861 billion. Of those billion. Of those 4.48.6 million returns, approximately million returns, approximately 1.75.1 million tax million tax
households received excess advance payments, while more than 2.households received excess advance payments, while more than 2.23 million tax households million tax households
received deficient advance payments.received deficient advance payments.28 The remaining difference represents households that The remaining difference represents households that
received the correct amount in APTC.received the correct amount in APTC.
The SOI data indicate that approximately The SOI data indicate that approximately 4.27.9 million tax returns for the million tax returns for the 20202022 tax year claimed a tax year claimed a
total of total ofnearly $32.2more than $54 billion of tax credit. The billion of tax credit. The 4.27.9 million returns represent the number of tax million returns represent the number of tax
households that were actually eligible for the credit, based on the information provided in the households that were actually eligible for the credit, based on the information provided in the
20202022 tax returns. tax returns.2929 These eligible households represent those who received advance payments of These eligible households represent those who received advance payments of
the credit and those who claimed the credit after the end of the tax year.30
26 The data represent tax return information at the time of filing; therefore, the data do not incorporate corrections or
amendments made to the tax returns at a later time. IRS, “Affordable Care Act Items,” Table 2.7, at
https://www.irs.gov/statistics/soi-tax-stats-individual-income-tax-returns-complete-report-publication-1304.
27 The SOI report does not include all estimates of tax credit recipients and claimants necessary to fully describe the
overlap of these two taxpayer populations.
28 Households that receive excess PTC payments generally must repay those excess amounts (with repayments capped
for certain households based on income). However, ARPA suspended such repayments for 2020. The IRS included this
explanation in the SOI report: “When filling out Form 8962, Premium Tax Credit, taxpayers who owed this repayment
were instructed to delete the form. Taxpayers who had already filed their returns had this amount reimbursed but are
included in the data in this report.” IRS, Statistics of Income—2020, Individual Income Tax Returns, p. 18.
29 The number of taxpayers who received advance payments exceeded the number who were eligible for the credit,
indicating that some taxpayers received unauthorized subsidies. The IRS did not include, in the SOI report, an estimate
of the number of taxpayers who received unauthorized subsidies.
30 The IRS did not include, in the SOI report, separate estimates of the number of eligible taxpayers who received
advance payments and the number who did not.
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the credit and those who claimed the credit after the end of the tax year.30
The IRS also has published limited tax credit data by state, county, and zip code.The IRS also has published limited tax credit data by state, county, and zip code.31
31 Enrollment Data
HHS regularly publishes data on persons selecting and enrolling in exchange plans, including HHS regularly publishes data on persons selecting and enrolling in exchange plans, including
individuals who were determined eligible for the PTC. For plan year individuals who were determined eligible for the PTC. For plan year20232024, HHS posted reports , HHS posted reports
and public-use files available with national enrollment data, as well as limited data by state, and public-use files available with national enrollment data, as well as limited data by state,
county, and zip code.county, and zip code.3232 During the During the 20232024 open enrollment period (OEP), approximately open enrollment period (OEP), approximately 9092% of all % of all
exchange enrollees were eligible for the tax credit.exchange enrollees were eligible for the tax credit.3333
Cost-Sharing Reductions
An individual who qualifies for the PTC, is enrolled in a silver plan (see text box above, An individual who qualifies for the PTC, is enrolled in a silver plan (see text box above,
“"Actuarial Value and Metal PlansActuarial Value and Metal Plans”"), ), and has annual household income no greater than 250% of has annual household income no greater than 250% of
FPL is eligible for cost-sharing reductions (CSRs).FPL is eligible for cost-sharing reductions (CSRs).3434 The purpose of CSRs is to reduce an The purpose of CSRs is to reduce an
individual’individual's (or familys (or family’'s) expenses related to cost-sharing requirements under the silver plan; such s) expenses related to cost-sharing requirements under the silver plan; such
requirements may include deductibles, co-payments, coinsurance, and annual cost-sharing requirements may include deductibles, co-payments, coinsurance, and annual cost-sharing
limits.limits.3535 There are two types of CSRs, and the level of assistance for each varies by income band There are two types of CSRs, and the level of assistance for each varies by income band
(see descriptions below). Individuals who are eligible for cost-sharing assistance may receive (see descriptions below). Individuals who are eligible for cost-sharing assistance may receive
both types of subsidies, as long as they meet the applicable eligibility requirements.both types of subsidies, as long as they meet the applicable eligibility requirements.3636
Reduction in Annual Cost-Sharing Limits
Each metal plan limits the total dollar amount an insured consumer will be required to pay out of Each metal plan limits the total dollar amount an insured consumer will be required to pay out of
pocket for use of covered services in a plan year (referred to as an pocket for use of covered services in a plan year (referred to as an annual cost-sharing limit in in
this report). In other words, the amount an individual spends in a given year on health care this report). In other words, the amount an individual spends in a given year on health care
services covered under his or her plan is capped.services covered under his or her plan is capped.3737 For For 20242025, the annual cost-sharing limit for , the annual cost-sharing limit for
self-only coverage is $9,self-only coverage is $9,450200; the corresponding limit for family coverage is $18,; the corresponding limit for family coverage is $18,900.38400.38 One type One type
of cost-sharing assistance reduces such limits (seeof cost-sharing assistance reduces such limits (see Table 3). This CSR reduces the annual limit
31 See IRS, “ACA Data from Individuals,” at https://www.irs.gov/statistics/soi-tax-stats-affordable-care-act-aca-
statistics-individual-income-tax-items.
32 CMS, “2023 Marketplace Open Enrollment Period Public Use Files,” athttps://www.cms.gov/data-research/statistics-
trends-and-reports/marketplace-products.Error! Hyperlink reference not valid.
33 See CMS, “Health Insurance Marketplaces 2023 Open Enrollment Report,” at https://www.cms.gov/files/document/
health-insurance-exchanges-2023-open-enrollment-report-final.pdf.
34 ACA §1402.
35 A deductible is the amount an insured consumer pays for covered health care services before the applicable insurer
begins to pay for such services (with exceptions). Coinsurance is a share of costs, expressed as a percentage, an insured
consumer pays for a covered health service. A co-payment is a fixed dollar amount an insured consumer pays for a
covered health service. An annual cost-sharing limit is the total dollar amount an insured consumer would be required
to pay out of pocket for use of covered services in a plan year. Once an insured consumer’s out-of-pocket spending
meets this limit, the insurer generally will pay 100% of covered costs for the remainder of the plan year.
36 In addition to CSRs, the ACA provides special cost-sharing assistance to Native Americans and Alaskan Natives
whose household incomes do not exceed 300% of FPL and are enrolled in exchange plans. For such individuals,
insurers will eliminate any cost-sharing requirements. ACA §1402(d).
37 The annual cost-sharing limit applies only to health services that are covered under the health plan and are received
within the provider network, if applicable.
38 See Center for Consumer Information and Insurance Oversight, “Premium Adjustment Percentage, Maximum
Annual Limitation on Cost Sharing, Reduced Maximum Annual Limitation on Cost Sharing, and Required
Contribution Percentage for the 2024 Benefit Year,” December 12, 2022, at https://www.cms.gov/files/document/2024-
papi-parameters-guidance-2022-12-12.pdf.
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. This CSR reduces the annual limit faced by premium credit recipients with incomes up to and including 250% of FPL; greater faced by premium credit recipients with incomes up to and including 250% of FPL; greater
subsidy amounts are provided to those with lower incomes. In general, this cost-sharing subsidy amounts are provided to those with lower incomes. In general, this cost-sharing
assistance targets individuals and families that use a great deal of health care in a year and, assistance targets individuals and families that use a great deal of health care in a year and,
therefore, have high cost-sharing expenses. Enrollees who use little health care may not generate therefore, have high cost-sharing expenses. Enrollees who use little health care may not generate
enough cost-sharing expenses to reach the annual limit.enough cost-sharing expenses to reach the annual limit.
Table 3. ACA Cost-Sharing Reductions: Reduced Annual Cost-Sharing Limits,2024
2025
Household Income Tier,
by Federal Poverty Level
Reduced Annual Cost-Sharing Limits
by Federal Poverty Level
Self-Only Coverage
Family Coverage
100% to 150%100% to 150%
$3,150
$6,300
>150% to 200%>150% to 200%
$3,150
$6,300
>200% to 250%>200% to 250%
$7,550
$15,100
Source: Center for Consumer Information and Insurance Oversight, Center for Consumer Information and Insurance Oversight, “"Premium Adjustment Percentage, Premium Adjustment Percentage,
Maximum Annual Limitation on Cost Sharing, Reduced Maximum Annual Limitation on Cost Sharing, and Maximum Annual Limitation on Cost Sharing, Reduced Maximum Annual Limitation on Cost Sharing, and
Required Contribution Percentage for the Required Contribution Percentage for the20242025 Benefit Year, Benefit Year,” December 12, 2022" November 15, 2023, at https://www.cms.gov/files/, at https://www.cms.gov/files/
document/document/20242025-papi-parameters-guidance--papi-parameters-guidance-2022-12-12.pdf.
2023-11-15.pdf. Notes: ACA = Patient Protection and Affordable Care Act (P.L. 111-148, as amended).ACA = Patient Protection and Affordable Care Act (P.L. 111-148, as amended).
For example, consider the hypothetical individual who resides in Lebanon, KS and has household For example, consider the hypothetical individual who resides in Lebanon, KS and has household
income at 150% of FPL (as discussed in the income at 150% of FPL (as discussed in the“"Required Premium Contribution ExamplesRequired Premium Contribution Examples”" section section
of this report). A person eligible to receive CSRs at that income level would face an annual cost-of this report). A person eligible to receive CSRs at that income level would face an annual cost-
sharing limit of $3,sharing limit of $3,150050, compared to an annual limit of $9,, compared to an annual limit of $9,450200 for someone also enrolled in a for someone also enrolled in a
silver plan but does not receive this subsidy. The practical effect of this reduction would occur silver plan but does not receive this subsidy. The practical effect of this reduction would occur
when this individual spent up to the reduced amount. For additional coveredwhen this individual spent up to the reduced amount. For additional covered, in-network services received by services received by
the individual, the insurance company would pay the entire cost. Therefore, by reducing the the individual, the insurance company would pay the entire cost. Therefore, by reducing the
annual cost-sharing limit, eligible individuals are required to spend less before benefitting from annual cost-sharing limit, eligible individuals are required to spend less before benefitting from
this financial assistance.this financial assistance.
Reduction in Cost-Sharing Requirements
The second type of CSR also applies to premium credit recipients with incomes up to and The second type of CSR also applies to premium credit recipients with incomes up to and
including 250% of FPL. For eligible individuals, the cost-sharing requirements (for the plans in including 250% of FPL. For eligible individuals, the cost-sharing requirements (for the plans in
which they have enrolled) are reduced to ensure that the plans cover a certain percentage of which they have enrolled) are reduced to ensure that the plans cover a certain percentage of
allowed health care expenses, on average. The practical effect of this CSR is to increase the allowed health care expenses, on average. The practical effect of this CSR is to increase the
actuarial value (AV) of the exchange plan in which the person is enrolled (seeactuarial value (AV) of the exchange plan in which the person is enrolled (see Table 4). In other . In other
words, enrollees face lower cost-sharing requirements than they would have without this words, enrollees face lower cost-sharing requirements than they would have without this
assistance. Given that this type of CSR directly affects cost-sharing requirements (e.g., lowers a assistance. Given that this type of CSR directly affects cost-sharing requirements (e.g., lowers a
co-payment), both enrollees who use minimal health care and those who use a great deal of co-payment), both enrollees who use minimal health care and those who use a great deal of
services may benefit from this assistance.services may benefit from this assistance.
Table 4. ACA Cost-Sharing Reductions: Increased Actuarial Values
Household Income Tier,
by Federal Poverty Level New Actuarial Values for Cost-
by Federal Poverty Level
Sharing Subsidy Recipients
100% to150%
94%
>150% to 200%
87%
>200% to 250%
73%
Sharing Subsidy Recipients
Source: 45 C.F.R. §156.420.45 C.F.R. §156.420.
Note: ACA = Patient Protection and Affordable Care Act (P.L. 111-148, as amended).: ACA = Patient Protection and Affordable Care Act (P.L. 111-148, as amended).
Congressional Research Service
11
link to page 14 link to page 14 Health Insurance Premium Tax Credit and Cost-Sharing Reductions
To be eligible for cost-sharing subsidies, an individual must be enrolled in a silver plan, which To be eligible for cost-sharing subsidies, an individual must be enrolled in a silver plan, which
already has an AV of 70% (see text box above, already has an AV of 70% (see text box above,“"Actuarial Value and Metal PlansActuarial Value and Metal Plans”"). For an ). For an
individual who receives the CSR referred to inindividual who receives the CSR referred to in Table 4, the health plan will impose different cost-the health plan will impose different cost-
sharing requirements so that the silver plan will meet the applicable increased AV. The ACA does sharing requirements so that the silver plan will meet the applicable increased AV. The ACA does
not specify how a plan should reduce cost-sharing requirements to increase the AV from 70% to not specify how a plan should reduce cost-sharing requirements to increase the AV from 70% to
one of the higher AVs. Through regulations, HHS requires each insurance company that offers a one of the higher AVs. Through regulations, HHS requires each insurance company that offers a
plan subject to this CSR to develop variations of its silver plan; these silver plan variations must plan subject to this CSR to develop variations of its silver plan; these silver plan variations must
comply with the higher levels of actuarial value (73%, 87%, and 94%).comply with the higher levels of actuarial value (73%, 87%, and 94%).3939 When an individual is When an individual is
determined by an exchange to be eligible for CSRs, the person is enrolled in the silver plan determined by an exchange to be eligible for CSRs, the person is enrolled in the silver plan
variation that corresponds with his or her income.variation that corresponds with his or her income.
Consider the same hypothetical individual discussed in the previous section. Since this personConsider the same hypothetical individual discussed in the previous section. Since this person’s
's income is at 150% of FPL, if he or she receives this type of subsidy, the silver plan in which he or income is at 150% of FPL, if he or she receives this type of subsidy, the silver plan in which he or
she is enrolled will have an AV of 94% (as indicated inshe is enrolled will have an AV of 94% (as indicated in Table 4), instead of the usual 70% AV for , instead of the usual 70% AV for
silver plans. Such an increase in the AV has a notable effect on applicable cost-sharing silver plans. Such an increase in the AV has a notable effect on applicable cost-sharing
requirements. For example, the benchmark plan in Lebanon, KS, has a deductible of $requirements. For example, the benchmark plan in Lebanon, KS, has a deductible of $2,5005,000 in 2025 in
2024. For an individual whose income allows for enrollment in a silver plan with an AV of 94%, . For an individual whose income allows for enrollment in a silver plan with an AV of 94%,
that planthat plan’'s deductible is $s deductible is $150.400.40 Given that a deductible is the amount an insured consumer must Given that a deductible is the amount an insured consumer must
pay for covered health services pay for covered health services before the applicable insurer begins to pay for such services (with the applicable insurer begins to pay for such services (with
exceptions), a lower deductible means the consumer pays less upfront before the insurer exceptions), a lower deductible means the consumer pays less upfront before the insurerpaysbegins paying for for
covered services.
Author Information
Bernadette Fernandez
Specialist in Health Care Financing
Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan
shared staff to congressional committees and Members of Congress. It operates solely at the behest of and
under the direction of Congress. Information in a CRS Report should not be relied upon for purposes other
than public understanding of information that has been provided by CRS to Members of Congress in
connection with CRS’s institutional role. CRS Reports, as a work of the United States Government, are not
subject to copyright protection in the United States. Any CRS Report may be reproduced and distributed in
its entirety without permission from CRS. However, as a CRS Report may include copyrighted images or
material from a third party, you may need to obtain the permission of the copyright holder if you wish to
copy or otherwise use copyrighted material.
39 See 45 C.F.R. §156.420.
40 Accessed health plan information on January 24, 2024 using online tool: “See plans and prices” available at
https://www.healthcare.gov/see-plans/#/.
Congressional Research Service
R44425 · VERSION 26 · UPDATED
12
covered services.
1.
2.
3.
4.
5.
6.
7.
8.
The term lawfully present was not defined under the ACA, nor was it defined under the federal statute governing U.S. immigration policy, the Immigration and Nationality Act. Lawfully present was defined in regulation and includes qualified noncitizens (such as lawful permanent residents, asylees, and refugees), foreign nationals in valid nonimmigrant status, and certain other enumerated noncitizens; see 45 C.F.R. §155.20. For a discussion of immigrant and nonimmigrant groups considered lawfully present for health insurance exchange purposes, see the "Affordable Care Act (ACA) Health Insurance Exchanges" section of CRS Report R47351, Noncitizens' Access to Health Care.
9.
For individuals who experience a "triggering event" during the plan year, exchanges are required to provide an SEP to allow such individuals the option of enrolling into an exchange for that plan year. SEP rules are specified at 45 C.F.R. 155.420, at https://www.govinfo.gov/content/pkg/CFR-2013-title45-vol1/xml/CFR-2013-title45-vol1-sec155-420.xml. The ACA provides a specific SEP to members of Indian tribes. Such individuals may enroll in an exchange plan and switch exchange plans on a monthly basis. ACA §1311(c)(6)(D).
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
For estimates of premium credit amounts based on factors for which insurance companies are allowed to vary premiums (as described in the "Background" section of this report), see KFF, "Health Insurance Marketplace Calculator," at http://kff.org/interactive/subsidy-calculator/.
26.
The family in this hypothetical example illustrates the effect of family size and composition in a number of ways. For example, premiums for a given plan may vary based on the number of family members and whether those family members include adults, children, or both. Also, family size is incorporated into the HHS poverty guidelines. As indicated in Table 1 of this report, the larger the family, the larger the dollar amount equivalent to the poverty level. Changes in premiums or income level would directly affect the calculation of a given PTC.
27.
The data represent tax return information at the time of filing; therefore, the data do not incorporate corrections or amendments made to the tax returns at a later time. IRS, "Affordable Care Act Items," Table 2.7, at https://www.irs.gov/statistics/soi-tax-stats-individual-income-tax-returns-complete-report-publication-1304-basic-tables-part-2.
28.
29.
30.
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
Contents
- Background
- Premium Tax Credit
- Eligibility
- File Federal Income Tax Returns
- Enroll in a Plan Through an Individual Exchange
- Have Annual Household Income at or Above 100% of the Federal Poverty Level
- Not Eligible for Minimum Essential Coverage
- Determination of Required Premium Contributions and Premium Tax Credit Amounts
- Required Premium Contribution Examples
- Reconciliation of Advance Premium Tax Credit Payments
- Preliminary Tax Credit Data
- Tax Year 2022
- Enrollment Data
- Cost-Sharing Reductions
- Reduction in Annual Cost-Sharing Limits
- Reduction in Cost-Sharing Requirements
Tables
- Table 1. Minimum Income Levels Applicable to Eligibility for the Premium Tax Credit for 2025, by Selected Family Sizes
- Table 2. Annual Repayment Limits of Excess Premium Tax Credit Payments, 2025
- Table 3. ACA Cost-Sharing Reductions: Reduced Annual Cost-Sharing Limits, 2025
- Table 4. ACA Cost-Sharing Reductions: Increased Actuarial Values
Summary
Certain individuals without access to subsidized health insurance coverage may bereconciliation measure (P.L. 117-169reconciliation measure (P.L. 117-169
based on a formula specified in statute. Individuals who are eligible for the PTC may be required to contribute based on a formula specified in statute. Individuals who are eligible for the PTC may be required to contribute
some amount toward the purchase of private health insurance.some amount toward the purchase of private health insurance.
above 100% of the federal poverty level; not be eligible for certain types of health insurance coverage, with above 100% of the federal poverty level; not be eligible for certain types of health insurance coverage, with
exceptions; file federal income tax returns; and enroll in a plan through an individual exchange. Exchanges (or exceptions; file federal income tax returns; and enroll in a plan through an individual exchange. Exchanges (or
marketplaces) are not insurance companies; rather, exchanges serve as marketplaces for the purchase of private marketplaces) are not insurance companies; rather, exchanges serve as marketplaces for the purchase of private
health insurance.health insurance.
little or no federal income tax liability. The credit also is advanceablelittle or no federal income tax liability. The credit also is advanceable
advanced payments of the credit (or APTC). APTCs are provided on a monthly basis to coincide with the payment advanced payments of the credit (or APTC). APTCs are provided on a monthly basis to coincide with the payment
of insurance premiums, automatically reducing consumer costs associated with purchasing insurance. The credit of insurance premiums, automatically reducing consumer costs associated with purchasing insurance. The credit
is financed through permanent appropriationsis financed through permanent appropriations
expenses. The ACA established two types of cost-sharing reductions (CSRs). One type of subsidy reduces annual expenses. The ACA established two types of cost-sharing reductions (CSRs). One type of subsidy reduces annual
cost-sharing limits; the other directly reduces cost-sharing requirements (e.g., lowers a deductible). Individuals cost-sharing limits; the other directly reduces cost-sharing requirements (e.g., lowers a deductible). Individuals
who are eligible for CSRs may receive both types.who are eligible for CSRs may receive both types.
expanded eligibility for the PTC and increased the credit amount for tax years 2021 and 2022.expanded eligibility for the PTC and increased the credit amount for tax years 2021 and 2022.
2025.2025.
requirements apply in 2025. Temporary Amendments to the Premium Tax Credit
credit (PTC) and cost-sharing reductions (CSRs). Of those temporary changes, one provision expanded credit (PTC) and cost-sharing reductions (CSRs). Of those temporary changes, one provision expanded
eligibility for and the amount of the PTC for tax years 2021 and 2022.eligibility for and the amount of the PTC for tax years 2021 and 2022.
Other ARPA changes to the PTC and CSRs that have expired include the provisions thatOther ARPA changes to the PTC and CSRs that have expired include the provisions that
provided in excessprovided in excess, and and
received unemployment compensation during calendar year 2021.unemployment compensation during calendar year 2021.
the Inflation Reduction Act) makes temporary changes to the PTC. The measure extends the ARPA the Inflation Reduction Act) makes temporary changes to the PTC. The measure extends the ARPA
provision that expanded eligibility for and the amount of the PTC. It extends this provision for three provision that expanded eligibility for and the amount of the PTC. It extends this provision for three additional years years
to sunset at the end of tax year 2025. The enhanced PTC extension under the reconciliation measure, like to sunset at the end of tax year 2025. The enhanced PTC extension under the reconciliation measure, like
ARPA, provides ARPA, provides
with annual incomes between 100% and 150% of the federal poverty level (FPL). Eligible individuals and with annual incomes between 100% and 150% of the federal poverty level (FPL). Eligible individuals and
families with higher incomes may receive partial subsidies for such plans. For all eligible households with families with higher incomes may receive partial subsidies for such plans. For all eligible households with
incomes at or above 400% of FPL, each such household would be required to spend up to 8.5% of their incomes at or above 400% of FPL, each such household would be required to spend up to 8.5% of their
income (prorated monthly) before receiving any credit. For some higher-income households, this results in income (prorated monthly) before receiving any credit. For some higher-income households, this results in
receiving no credit despite being receiving no credit despite being
otherwise eligible. This report describes current law and applicable regulations and guidance, specifically how the PTC and This report describes current law and applicable regulations and guidance, specifically how the PTC and
CSR requirements apply in CSR requirements apply in
Sources: 26 U.S.C. 36B(b)(3)(A)( 26 U.S.C. 36B(b)(3)(A)(
2021 (P.L. 117-2): Private Health Insurance, Medicaid, CHIP, and Medicare Provisions..
Background
Certain individuals and families without access to subsidized health insurance coverage may be Certain individuals and families without access to subsidized health insurance coverage may be
eligible for a premium tax credit (PTC). This crediteligible for a premium tax credit (PTC). This credit
Affordable Care Act (ACA; P.L. 111-148, as amended) and Affordable Care Act (ACA; P.L. 111-148, as amended) and was amended under the American Rescue amended under the American Rescue
Plan Act of 2021 (ARPA; P.L. 117-2) and the enacted Plan Act of 2021 (ARPA; P.L. 117-2) and the enacted FY2022 budget reconciliation measure (P.L. 117-budget reconciliation measure (P.L. 117-
receive PTC payments also may be eligible for subsidies that reduce cost-sharing expenses.receive PTC payments also may be eligible for subsidies that reduce cost-sharing expenses.2
enroll in health plans offered through health insurance exchanges and meet other criteria. enroll in health plans offered through health insurance exchanges and meet other criteria.
Exchanges operate in every state and the District of Columbia (DC).Exchanges operate in every state and the District of Columbia (DC).
insurance companies; rather, they are marketplaces that offer private health plans to qualified insurance companies; rather, they are marketplaces that offer private health plans to qualified
individuals and small businesses. The ACA specifically requires exchanges to offer insurance individuals and small businesses. The ACA specifically requires exchanges to offer insurance
options to individuals and to small businesses, so exchanges are structured to assist these two options to individuals and to small businesses, so exchanges are structured to assist these two
different types of customers. Consequently, each state has one exchange to serve individuals and different types of customers. Consequently, each state has one exchange to serve individuals and
Options Program, or , or SHOP, exchange).).
with numerous federal and state requirements. Among such requirements are restrictions related with numerous federal and state requirements. Among such requirements are restrictions related
to the determination of premiums for exchange plans (to the determination of premiums for exchange plans (rating restrictions). Insurance companies ). Insurance companies
are prohibited from using health factors in determining premiums. However, they are allowed to are prohibited from using health factors in determining premiums. However, they are allowed to
vary premiums by age (within specified limits), geography, number of individuals enrolling in a vary premiums by age (within specified limits), geography, number of individuals enrolling in a
plan, and smoking status (within specified limits).plan, and smoking status (within specified limits).4
Premium Tax Credit
The dollar amount of the PTC is based on a statutory formula and varies for each individual. The dollar amount of the PTC is based on a statutory formula and varies for each individual.
Individuals who are eligible for the premium credit generally are required to contribute some Individuals who are eligible for the premium credit generally are required to contribute some
amount toward the purchase of their health insurance.amount toward the purchase of their health insurance.
even if they have little or no federal income tax liability. The credit also is advanceableeven if they have little or no federal income tax liability. The credit also is advanceable
individuals may choose to receive the credit in advance of filing taxes individuals may choose to receive the credit in advance of filing taxes and on a monthly basis to on a monthly basis to
coincide with the payment of insurance premiums (technically, advance payments go directly to coincide with the payment of insurance premiums (technically, advance payments go directly to
insurers). Advance payments (or APTC) automatically reduce monthly premiums by the credit insurers). Advance payments (or APTC) automatically reduce monthly premiums by the credit
amount. Therefore, the direct cost of insurance to an individual or family that is receiving APTC amount. Therefore, the direct cost of insurance to an individual or family that is receiving APTC
payments generally will be lower than the advertised cost for a given exchange plan.payments generally will be lower than the advertised cost for a given exchange plan.
The PTC is financed through a permanent appropriation through Title 31 of the United States Code, which provides indefinite budget authority for PTC/APTC disbursements (31 U.S.C. 1324). Eligibility To be eligible to receive the PTC, individuals must meet the following criteria:To be eligible to receive the PTC, individuals must meet the following criteria:
administered by the Internal Revenue Service (IRS) through the federal tax system. The premium administered by the Internal Revenue Service (IRS) through the federal tax system. The premium
credit process requires qualifying individuals to file federal income tax returns, even if their credit process requires qualifying individuals to file federal income tax returns, even if their
incomes are at levels that normally do not necessitate the filing of such returns.incomes are at levels that normally do not necessitate the filing of such returns.
exceptions. The calculation and allocation of credit amounts may differ in the event of a change exceptions. The calculation and allocation of credit amounts may differ in the event of a change
in tax-filing status during a given year (e.g., individuals who marry or divorce).in tax-filing status during a given year (e.g., individuals who marry or divorce).7
Enroll in a Plan Through an Individual Exchange
Actuarial Value and Metal Plans
allowed charges. allowed charges.
for an for an
(70%), or bronze (60%).(70%), or bronze (60%).
Although certain individuals are not eligible Although certain individuals are not eligible
to enroll in exchanges due to incarceration or immigration status, their family members may still to enroll in exchanges due to incarceration or immigration status, their family members may still
receive the PTC as long as those family members meet all eligibility criteria.receive the PTC as long as those family members meet all eligibility criteria.
enrollment period (OEP). The OEP for exchanges occurs near the end of a given calendar year for enrollment period (OEP). The OEP for exchanges occurs near the end of a given calendar year for
enrollment into health plans that begin the following year. Under certain circumstances, enrollment into health plans that begin the following year. Under certain circumstances,
individuals may enroll in exchange plans outside of the OEP during a special enrollment period individuals may enroll in exchange plans outside of the OEP during a special enrollment period
(SEP).9 Have Annual Household Income at or Above 100% of the Federal Poverty
be eligible for the PTC in be eligible for the PTC in
modified adjusted gross income (MAGI).modified adjusted gross income (MAGI).
FPL may be eligible to receive the PTC for tax year FPL may be eligible to receive the PTC for tax year
that correspond to the eligibility criteria for the PTC in that correspond to the eligibility criteria for the PTC in
the Department of Health and Human Services [HHS] for the Department of Health and Human Services [HHS] for
2024).13 Table 1. Minimum Income Levels Applicable to Eligibility for the Premium Tax Credit for
Number of Persons in Family Income Levels Equivalent to 100% of FPL
48 Contiguous States
and DC
Alaska
Hawaii
1
$15,060
$18,810
$17,310
2
$20,440
$25,540
$23,500
3
$25,820
$32,270
$29,690
4
$31,200
$39,000
$35,880
Federal Register
Notes: For For
2024 HHS poverty guidelines. The poverty guidelines represent annual incomes for families HHS poverty guidelines. The poverty guidelines represent annual incomes for families
of different sizes and are updated annually for inflation. FPL = Federal Poverty Level. DC = District of Columbia. Not Eligible for Minimum Essential Coverage
coverage (MEC), with exceptions (described below). The ACA broadly defines MEC to include (MEC), with exceptions (described below). The ACA broadly defines MEC to include
Medicare Part A; Medicare Advantage; Medicaid (with exceptions); the State ChildrenMedicare Part A; Medicare Advantage; Medicaid (with exceptions); the State Children
Insurance Program (CHIP); Tricare; Tricare for Life, a health care program administered by the Insurance Program (CHIP); Tricare; Tricare for Life, a health care program administered by the
Department of Veterans Affairs; coverage provided through the Peace Corps program; any Department of Veterans Affairs; coverage provided through the Peace Corps program; any
government plan (local, state, federal), including the Federal Employees Health Benefits Program government plan (local, state, federal), including the Federal Employees Health Benefits Program
(FEHBP); any plan offered in the individual health insurance market; any employer-sponsored (FEHBP); any plan offered in the individual health insurance market; any employer-sponsored
plan (including group plans regulated by a foreign government); any grandfathered health plan; plan (including group plans regulated by a foreign government); any grandfathered health plan;
any qualified health plan offered inside or outside of exchanges; and any other coverage (such as any qualified health plan offered inside or outside of exchanges; and any other coverage (such as
a state high-risk pool) recognized by the HHS Secretary.a state high-risk pool) recognized by the HHS Secretary.
Notwithstanding the above MEC restrictions, an individual may be eligible for the credit even if he or she is eligible for any of the following individual may be eligible for the credit even if he or she is eligible for any of the following
sources of MEC:sources of MEC:
inadequate, the Biden Administration promulgated a final rule that clarified implementation of inadequate, the Biden Administration promulgated a final rule that clarified implementation of
this exception.this exception.
and cost-sharing requirements of employer plans to test for affordability and adequacy of such and cost-sharing requirements of employer plans to test for affordability and adequacy of such
plans to family members. plans to family members.
to the employee only even if the family was seeking coverage (this is referred to colloquially as to the employee only even if the family was seeking coverage (this is referred to colloquially as
the the
process resulted in some family members being ineligible for the PTC even when employer process resulted in some family members being ineligible for the PTC even when employer
coverage is unaffordable to them, because the employee-only cost is determined to be affordable. coverage is unaffordable to them, because the employee-only cost is determined to be affordable.
nonpregnant individuals with incomes up to 138% of FPL.nonpregnant individuals with incomes up to 138% of FPL.
premium credit through an exchange is determined to be eligible for Medicaid, the exchange must premium credit through an exchange is determined to be eligible for Medicaid, the exchange must
implemented the optional Medicaid expansion to include individuals with incomes at or above implemented the optional Medicaid expansion to include individuals with incomes at or above
100% of FPL (or any state that decided to expand eligibility to individuals irrespective of the 100% of FPL (or any state that decided to expand eligibility to individuals irrespective of the
which Medicaid eligibility ends.which Medicaid eligibility ends.
22 Determination of Required Premium Contributions and Premium
Tax Credit Amounts
Required Premium Contribution Examples
the annual household income (i.e., MAGI) of the individual (and tax dependents), the premium the annual household income (i.e., MAGI) of the individual (and tax dependents), the premium
for the exchange plan in which the individual (and any for the exchange plan in which the individual (and any eligible dependents) is enrolled, and other dependents) is enrolled, and other
factors.factors.
Maximum
health insurance (e.g., family size). For purposes of this report, health insurance (e.g., family size). For purposes of this report, Benchmark
to the premium for the second-lowest-cost silver plan (see text box in to the premium for the second-lowest-cost silver plan (see text box in
the "Eligibility" section of this report) in the personthis report) in the person
amount that a premium amount that a premium tax credit-eligible individual (or family) may pay toward the exchange credit-eligible individual (or family) may pay toward the exchange
premium. The required premium contribution is capped according to household income, with premium. The required premium contribution is capped according to household income, with
such income measured relative to the federal poverty level (such income measured relative to the federal poverty level (
increases, the share of income used to determine the required premium contribution also generally increases, the share of income used to determine the required premium contribution also generally
replaced those caps (seereplaced those caps (see Figure 1).
the premium of the plan in which the individual enrolls and the required contribution. Given that the premium of the plan in which the individual enrolls and the required contribution. Given that
the premium and required contribution vary from person to person, the premium credit amount the premium and required contribution vary from person to person, the premium credit amount
likewise varies. An extreme example is likewise varies. An extreme example is that when the premium for the benchmark plan is very low, when the premium for the benchmark plan is very low,
the tax credit may cover the entire premium and the individual may pay nothing toward the the tax credit may cover the entire premium and the individual may pay nothing toward the
premium. The opposite extreme scenario, for some higher-income individuals, is when the premium. The opposite extreme scenario, for some higher-income individuals, is when the
required contribution exceeds the premium amount, leading to a credit of zero dollars, meaning required contribution exceeds the premium amount, leading to a credit of zero dollars, meaning
the PTC-eligible individual (or family) would pay the entire premium amount.the PTC-eligible individual (or family) would pay the entire premium amount.
premium subsidies (toward benchmark plans); eligible individuals with higher incomes may premium subsidies (toward benchmark plans); eligible individuals with higher incomes may
receive partial subsidies for such plans. For all eligible households with annual incomes at or receive partial subsidies for such plans. For all eligible households with annual incomes at or
above 400% of FPL, each such household would be required to spend up to 8.5% of their income above 400% of FPL, each such household would be required to spend up to 8.5% of their income
(prorated monthly) before receiving any credit. For some higher-income households, this results (prorated monthly) before receiving any credit. For some higher-income households, this results
in receiving no credit despite being eligible. Beginning in 2026, the percentages of income used in receiving no credit despite being eligible. Beginning in 2026, the percentages of income used
in the credit formula will revert back to the annual adjustment process established under the ACA.in the credit formula will revert back to the annual adjustment process established under the ACA.
Figure 1. Cap on Required Premium Contributions for Individuals Who Are Eligible
Source: 26 U.S.C. 36B(b)(3)(A)(26 U.S.C. 36B(b)(3)(A)(
iii). Notes: The cap assumes that the individual The cap assumes that the individual
to calculate premium credit amounts. If the individual to calculate premium credit amounts. If the individual
credit amount. Section 9661 of the American Rescue Plan Act of 2021 (ARPA, P.L. 117-2) applied these credit amount. Section 9661 of the American Rescue Plan Act of 2021 (ARPA, P.L. 117-2) applied these
percentages to tax years 2021 and 2022. Section 12001 of the enacted percentages to tax years 2021 and 2022. Section 12001 of the enacted FY2022 budget reconciliation measure (P.L. 117-budget reconciliation measure (P.L. 117-
169169) extends the APRA provision through the end of tax year 2025. To illustrate the required premium contribution calculation for 2025, consider a premium tax credit
eligible individual living in Lebanon, KS—the geographic center of the continental United eligible individual living in Lebanon, KS—the geographic center of the continental United
States—with household income of $States—with household income of $
For For
premium for the benchmark plan in his or her local area (seepremium for the benchmark plan in his or her local area (see Figure 1). In other words, the . In other words, the
individual would have a zero-dollar premium if he or she enrolled in the benchmark plan. In individual would have a zero-dollar premium if he or she enrolled in the benchmark plan. In
contrast, an individual residing in the same area with income of $contrast, an individual residing in the same area with income of $
required to contribute 4.0% of his or her income toward the premium for the same plan. The required to contribute 4.0% of his or her income toward the premium for the same plan. The
maximum amount this individual would pay for the benchmark plan would be $1,maximum amount this individual would pay for the benchmark plan would be $1,
instance, consider a couple and one child residing in Lebanon, KS, who are eligible for the PTC instance, consider a couple and one child residing in Lebanon, KS, who are eligible for the PTC
with household income of $with household income of $
150% of FPL for premium credit purposes. Just as in the example above of the individual with 150% of FPL for premium credit purposes. Just as in the example above of the individual with
income at 150% of FPL, this family would be required to contribute 0.0% of its annual income income at 150% of FPL, this family would be required to contribute 0.0% of its annual income
toward the premium for the benchmark plan in its local area. In contrast, a family residing in the toward the premium for the benchmark plan in its local area. In contrast, a family residing in the
same area with income of $same area with income of $
income toward the premium for the same plan. The maximum amount this family would pay for income toward the premium for the same plan. The maximum amount this family would pay for
the benchmark plan would be $2,the benchmark plan would be $2,
month).month).
required contribution is the tax credit amount provided to the individual (or family). Therefore, required contribution is the tax credit amount provided to the individual (or family). Therefore,
factors that affect either the premium or the required contribution (or both) will change the factors that affect either the premium or the required contribution (or both) will change the
premium credit amount; such factors include age, family size, geographic location, and choice of premium credit amount; such factors include age, family size, geographic location, and choice of
metal plan.metal plan.
Reconciliation of Advance Premium Tax Credit Payments
As mentioned previously, an eligible individual (or family) may receive advance payments of the As mentioned previously, an eligible individual (or family) may receive advance payments of the
premium credit to coincide with insurance premiums due dates. For such an individual, the premium credit to coincide with insurance premiums due dates. For such an individual, the
advance premium tax credit (APTC) is provided on a monthly basis and the amount is calculated advance premium tax credit (APTC) is provided on a monthly basis and the amount is calculated
using an using an estimate of income. When an individual files his or her tax return for a given year, the of income. When an individual files his or her tax return for a given year, the
total amount of APTC he or she received in that tax year is reconciled with the amount he or she total amount of APTC he or she received in that tax year is reconciled with the amount he or she
should have received, based on should have received, based on actual income, as determined on the tax return. income, as determined on the tax return.
tax credit, the additional credit amount will be included in the individualtax credit, the additional credit amount will be included in the individual
or used to reduce the amount of taxes owed. If an individualor used to reduce the amount of taxes owed. If an individual
and he or she received too much in APTC payments, the excess credit amount generally will be and he or she received too much in APTC payments, the excess credit amount generally will be
tax relief provided to individuals with lower incomes (tax relief provided to individuals with lower incomes (
Table 2. Annual Repayment Limits of Excess Premium Tax Credit Payments,
2025 Household Income (Expressed as a Percentage
<200%
$375
200% to <300%
$975
300% to <400%
$1,625
Notes: The applicable The applicable
The IRS has published preliminary data about the PTC in its annual The IRS has published preliminary data about the PTC in its annual
reports. The most recently published SOI report is for tax year reports. The most recently published SOI report is for tax year
summary statistics about two overlapping populations: tax households that received APTC, and summary statistics about two overlapping populations: tax households that received APTC, and
households that claimed the credit on their individual income tax returns.households that claimed the credit on their individual income tax returns.
28 Tax Year
credit totaling to almost $credit totaling to almost $
households received excess advance payments, while more than 2.households received excess advance payments, while more than 2.
received deficient advance payments.received deficient advance payments.
received the correct amount in APTC.received the correct amount in APTC.
total of total of
households that were actually eligible for the credit, based on the information provided in the households that were actually eligible for the credit, based on the information provided in the
31 Enrollment Data
HHS regularly publishes data on persons selecting and enrolling in exchange plans, including HHS regularly publishes data on persons selecting and enrolling in exchange plans, including
individuals who were determined eligible for the PTC. For plan year individuals who were determined eligible for the PTC. For plan year
and public-use files available with national enrollment data, as well as limited data by state, and public-use files available with national enrollment data, as well as limited data by state,
county, and zip code.county, and zip code.
exchange enrollees were eligible for the tax credit.exchange enrollees were eligible for the tax credit.33
Cost-Sharing Reductions
An individual who qualifies for the PTC, is enrolled in a silver plan (see text box above, An individual who qualifies for the PTC, is enrolled in a silver plan (see text box above,
FPL is eligible for cost-sharing reductions (CSRs).FPL is eligible for cost-sharing reductions (CSRs).
requirements may include deductibles, co-payments, coinsurance, and annual cost-sharing requirements may include deductibles, co-payments, coinsurance, and annual cost-sharing
limits.limits.
(see descriptions below). Individuals who are eligible for cost-sharing assistance may receive (see descriptions below). Individuals who are eligible for cost-sharing assistance may receive
both types of subsidies, as long as they meet the applicable eligibility requirements.both types of subsidies, as long as they meet the applicable eligibility requirements.36
Reduction in Annual Cost-Sharing Limits
Each metal plan limits the total dollar amount an insured consumer will be required to pay out of Each metal plan limits the total dollar amount an insured consumer will be required to pay out of
pocket for use of covered services in a plan year (referred to as an pocket for use of covered services in a plan year (referred to as an annual cost-sharing limit in in
this report). In other words, the amount an individual spends in a given year on health care this report). In other words, the amount an individual spends in a given year on health care
services covered under his or her plan is capped.services covered under his or her plan is capped.
self-only coverage is $9,self-only coverage is $9,
of cost-sharing assistance reduces such limits (seeof cost-sharing assistance reduces such limits (see Table 3)
subsidy amounts are provided to those with lower incomes. In general, this cost-sharing subsidy amounts are provided to those with lower incomes. In general, this cost-sharing
assistance targets individuals and families that use a great deal of health care in a year and, assistance targets individuals and families that use a great deal of health care in a year and,
therefore, have high cost-sharing expenses. Enrollees who use little health care may not generate therefore, have high cost-sharing expenses. Enrollees who use little health care may not generate
enough cost-sharing expenses to reach the annual limit.enough cost-sharing expenses to reach the annual limit.
Table 3. ACA Cost-Sharing Reductions: Reduced Annual Cost-Sharing Limits,
Family Coverage
$3,050
$6,100
$3,050
$6,100
$7,350
$14,700
Maximum Annual Limitation on Cost Sharing, Reduced Maximum Annual Limitation on Cost Sharing, and Maximum Annual Limitation on Cost Sharing, Reduced Maximum Annual Limitation on Cost Sharing, and
Required Contribution Percentage for the Required Contribution Percentage for the
document/document/
2023-11-15.pdf. Notes: ACA = Patient Protection and Affordable Care Act (P.L. 111-148, as amended).ACA = Patient Protection and Affordable Care Act (P.L. 111-148, as amended).
income at 150% of FPL (as discussed in the income at 150% of FPL (as discussed in the
of this report). A person eligible to receive CSRs at that income level would face an annual cost-of this report). A person eligible to receive CSRs at that income level would face an annual cost-
sharing limit of $3,sharing limit of $3,
silver plan but does not receive this subsidy. The practical effect of this reduction would occur silver plan but does not receive this subsidy. The practical effect of this reduction would occur
when this individual spent up to the reduced amount. For additional coveredwhen this individual spent up to the reduced amount. For additional covered, in-network services received by services received by
the individual, the insurance company would pay the entire cost. Therefore, by reducing the the individual, the insurance company would pay the entire cost. Therefore, by reducing the
annual cost-sharing limit, eligible individuals are required to spend less before benefitting from annual cost-sharing limit, eligible individuals are required to spend less before benefitting from
this financial assistance.this financial assistance.
Reduction in Cost-Sharing Requirements
The second type of CSR also applies to premium credit recipients with incomes up to and The second type of CSR also applies to premium credit recipients with incomes up to and
including 250% of FPL. For eligible individuals, the cost-sharing requirements (for the plans in including 250% of FPL. For eligible individuals, the cost-sharing requirements (for the plans in
which they have enrolled) are reduced to ensure that the plans cover a certain percentage of which they have enrolled) are reduced to ensure that the plans cover a certain percentage of
allowed health care expenses, on average. The practical effect of this CSR is to increase the allowed health care expenses, on average. The practical effect of this CSR is to increase the
actuarial value (AV) of the exchange plan in which the person is enrolled (seeactuarial value (AV) of the exchange plan in which the person is enrolled (see Table 4). In other . In other
words, enrollees face lower cost-sharing requirements than they would have without this words, enrollees face lower cost-sharing requirements than they would have without this
assistance. Given that this type of CSR directly affects cost-sharing requirements (e.g., lowers a assistance. Given that this type of CSR directly affects cost-sharing requirements (e.g., lowers a
co-payment), both enrollees who use minimal health care and those who use a great deal of co-payment), both enrollees who use minimal health care and those who use a great deal of
services may benefit from this assistance.services may benefit from this assistance.
Table 4. ACA Cost-Sharing Reductions: Increased Actuarial Values
by Federal Poverty Level New Actuarial Values for Cost-
100% to150%
94%
>150% to 200%
87%
>200% to 250%
73%
Note: ACA = Patient Protection and Affordable Care Act (P.L. 111-148, as amended).: ACA = Patient Protection and Affordable Care Act (P.L. 111-148, as amended).
already has an AV of 70% (see text box above, already has an AV of 70% (see text box above,
individual who receives the CSR referred to inindividual who receives the CSR referred to in Table 4, the health plan will impose different cost-the health plan will impose different cost-
sharing requirements so that the silver plan will meet the applicable increased AV. The ACA does sharing requirements so that the silver plan will meet the applicable increased AV. The ACA does
not specify how a plan should reduce cost-sharing requirements to increase the AV from 70% to not specify how a plan should reduce cost-sharing requirements to increase the AV from 70% to
one of the higher AVs. Through regulations, HHS requires each insurance company that offers a one of the higher AVs. Through regulations, HHS requires each insurance company that offers a
plan subject to this CSR to develop variations of its silver plan; these silver plan variations must plan subject to this CSR to develop variations of its silver plan; these silver plan variations must
comply with the higher levels of actuarial value (73%, 87%, and 94%).comply with the higher levels of actuarial value (73%, 87%, and 94%).
determined by an exchange to be eligible for CSRs, the person is enrolled in the silver plan determined by an exchange to be eligible for CSRs, the person is enrolled in the silver plan
variation that corresponds with his or her income.variation that corresponds with his or her income.
's income is at 150% of FPL, if he or she receives this type of subsidy, the silver plan in which he or income is at 150% of FPL, if he or she receives this type of subsidy, the silver plan in which he or
she is enrolled will have an AV of 94% (as indicated inshe is enrolled will have an AV of 94% (as indicated in Table 4), instead of the usual 70% AV for , instead of the usual 70% AV for
silver plans. Such an increase in the AV has a notable effect on applicable cost-sharing silver plans. Such an increase in the AV has a notable effect on applicable cost-sharing
requirements. For example, the benchmark plan in Lebanon, KS, has a deductible of $requirements. For example, the benchmark plan in Lebanon, KS, has a deductible of $
that planthat plan
pay for covered health services pay for covered health services before the applicable insurer begins to pay for such services (with the applicable insurer begins to pay for such services (with
exceptions), a lower deductible means the consumer pays less upfront before the insurer exceptions), a lower deductible means the consumer pays less upfront before the insurer
covered services.
Footnotes
§1401 of the Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended); new §36B of the Internal Revenue Code of 1986 (IRC); §§9661-9663 of the American Rescue Plan Act of 2021 (ARPA, P.L. 117-2); and §12001 of the enacted FY2022 budget reconciliation measure (P.L. 117-169).
ACA §1402; and new §18071 of the Public Health Service Act (PHSA).
The ACA also gave the territories the option of establishing exchanges, but none elected to do so by the statutory deadline of October 1, 2013. For additional background about the exchanges, see CRS Report R44065, Overview of Health Insurance Exchanges.
For additional discussion regarding these rating restrictions, see CRS Report R45146, Federal Requirements on Private Health Insurance Plans.
Household income is measured according to the definition for modified adjusted gross income (MAGI); see the "Have Annual Household Income at or Above 100% of the Federal Poverty Level" section of this report. The guidelines that designate the federal poverty level (FPL) are used in various federal programs for eligibility purposes. The poverty guidelines vary by family size and by whether the individual resides in the 48 contiguous states and the District of Columbia, Alaska, or Hawaii. See Office of the Assistant Secretary for Planning and Evaluation, "Frequently Asked Questions Related to the Poverty Guidelines and Poverty," at https://aspe.hhs.gov/frequently-asked-questions-related-poverty-guidelines-and-poverty#programs.
ARPA §9661 expanded eligibility for the premium tax credit (PTC) by temporarily eliminating the phaseout for households with annual incomes above 400% of FPL. Elimination of the phaseout applied to tax years 2021 and 2022 under ARPA. §12001 of the enacted FY2022 budget reconciliation measure (P.L. 117-169) extends the APRA provision through the end of tax year 2025. The phaseout is scheduled to resume beginning in tax year 2026.
See IRS, "Health Insurance Premium Tax Credit: Final Regulations," 77 Federal Register 30377, May 23, 2012.
There are exceptions to the lower bound income threshold at 100% of FPL. One exception relates to the state option under the ACA to expand Medicaid for individuals with income up to 138% of FPL. If a state chooses to undertake the ACA Medicaid expansion (or has already expanded Medicaid above 100% of FPL), eligibility for the premium tax credit would begin above the income level at which Medicaid eligibility ends in such a state. (Note that in states that do not expand Medicaid to at least 100% of FPL, some low-income residents in those states are ineligible for both the credit and Medicaid.) Another exception is for lawfully present aliens with incomes below 100% of FPL, who are not eligible for Medicaid for the first five years that they are lawfully present. The ACA established §36B(c)(1)(B) of the IRC to allow such lawfully present aliens to be eligible for the credit. Lastly, the final rule on the premium tax credit provided a special rule for credit recipients whose incomes at the end of a given tax year end up being less than 100% of FPL. Such individuals will continue to be considered eligible for the PTC for that tax year.
See CRS Report R43861, The Use of Modified Adjusted Gross Income (MAGI) in Federal Health Programs, for background information about the use of MAGI in determining eligibility for the premium tax credit.
ARPA §9661 expanded eligibility for the PTC by temporarily eliminating the phaseout for households with annual incomes above 400% of FPL. Elimination of the phaseout applied to tax years 2021 and 2022 under ARPA. §12001 the enacted FY2022 budget reconciliation measure (P.L. 117-169) extends the APRA provision through the end of tax year 2025. The phaseout would resume beginning in tax year 2026.
The poverty guidelines are updated annually at the beginning of the calendar year. However, premium credit calculations are based on the prior year's guidelines to provide individuals with timely information as they compare and enroll in exchange plans during the OEP (which occurs prior to the beginning of the plan year).
See CRS Report R44438, The Individual Mandate for Health Insurance Coverage: In Brief.
The private health insurance market continues to exist outside of the ACA exchanges. Moreover, almost all exchange plans may be offered in the market outside of exchanges.
For 2025, if the employee's premium contribution toward the employer's self-only plan exceeds 9.02% of household income, such a plan is considered unaffordable for premium credit eligibility purposes. For additional information, see IRS, Revenue Procedure 2024-35, at https://www.irs.gov/pub/irs-drop/rp-24-35.pdf.
If a plan's actuarial value is less than 60%, the plan is considered inadequate for premium credit eligibility purposes.
Limited benefits under Medicaid include the pregnancy-related benefits package, treatment of emergency medical conditions only, and other limited benefits.
87 Federal Register 61979, October 13, 2022, at https://www.federalregister.gov/documents/2022/10/13/2022-22184/affordability-of-employer-coverage-for-family-members-of-employees.
77 Federal Register 30377, May 23, 2012, at https://www.federalregister.gov/documents/2012/05/23/2012-12421/health-insurance-premium-tax-credit.
See CRS In Focus IF10399, Overview of the ACA Medicaid Expansion.
For a discussion concerning the interaction of Medicaid and PTC eligibility, see Medicaid and CHIP Payment and Access Commission, "Background" section in MACPAC, "Transitions Between Medicaid, CHIP, and Exchange Coverage," Issue Brief, July 2022, at https://www.macpac.gov/wp-content/uploads/2022/07/Coverage-transitions-issue-brief.pdf. For recent enrollment trend data across insurance affordability programs, see Centers for Medicare & Medicaid Services (CMS), "Medicaid, CHIP, and Marketplace Enrollments: Enrollment Trends Update," December 18, 2023, at https://www.medicaid.gov/sites/default/files/2023-12/medicaid-unwinding-enroll-trends-snapshot-sep2023.pdf. For a map indicating state adoption of the ACA Medicaid expansion, see Kaiser Family Foundation (KFF), "Status of State Medicaid Expansion Decisions: Interactive Map," February 7, 2024, at https://www.kff.org/affordable-care-act/issue-brief/status-of-state-medicaid-expansion-decisions-interactive-map/. For exchange and PTC data by state, see CMS, "2023 Marketplace Open Enrollment Period Public Use Files," at https://www.cms.gov/data-research/statistics-trends-and-reports/marketplace-products/2023-marketplace-open-enrollment-period-public-use-files.
The PTC calculation uses the benchmark plan premium for the individual or family seeking exchange coverage, as long as such plan only provides coverage for the minimum level of benefits required under applicable federal law (referred to as essential health benefits [EHBs]). To the extent that an exchange plan includes benefits beyond EHBs or a state requires exchange plans to provide additional benefits, the portion of the premium attributable to such extra benefits are disregarded for PTC purposes. In other words, the PTC calculation uses the premium amount allocable to EHBs. See 26 U.S.C. 36B(b)(3)(D).
See ARPA §9661. The new percentages applied to the PTC for tax years 2021 and 2022. Under §12001 of the enacted FY2022 budget reconciliation measure (P.L. 117-169), these same percentages apply through the end of tax year 2025. Beginning in tax year 2026, the annual update to these percentages would revert to pre-ARPA statute and applicable IRS guidance.
The SOI report does not include all estimates of tax credit recipients and claimants necessary to fully describe the overlap of these two taxpayer populations.
The number of taxpayers who received advance payments exceeded the number who were eligible for the credit, indicating that some taxpayers received unauthorized subsidies. The IRS did not include, in the SOI report, an estimate of the number of taxpayers who received unauthorized subsidies.
The IRS did not include, in the SOI report, separate estimates of the number of eligible taxpayers who received advance payments and the number who did not.
See IRS, "ACA Data from Individuals," at https://www.irs.gov/statistics/soi-tax-stats-affordable-care-act-aca-statistics-individual-income-tax-items.
CMS, "2024 Marketplace Open Enrollment Period Public Use Files," at https://www.cms.gov/data-research/statistics-trends-and-reports/marketplace-products.
See CMS, "Health Insurance Marketplaces 2024 Open Enrollment Report," at https://www.cms.gov/files/document/health-insurance-exchanges-2024-open-enrollment-report-final.pdf.
ACA §1402.
A deductible is the amount an insured consumer pays for covered health care services before the applicable insurer begins to pay for such services (with exceptions). Coinsurance is a share of costs, expressed as a percentage, an insured consumer pays for a covered health service. A co-payment is a fixed dollar amount an insured consumer pays for a covered health service. An annual cost-sharing limit is the total dollar amount an insured consumer would be required to pay out of pocket for use of covered services in a plan year. Once an insured consumer's out-of-pocket spending meets this limit, the insurer generally will pay 100% of covered costs for the remainder of the plan year.
In addition to CSRs, the ACA provides special cost-sharing assistance to members of Indian tribes, (i.e., Native Americans and Alaskan Natives), whose household incomes do not exceed 300% of FPL and are enrolled in exchange plans. For such individuals, insurers will eliminate any cost-sharing requirements. ACA §1402(d).
The annual cost-sharing limit applies only to health services that are covered under the health plan and are received within the provider network, if applicable.
See Center for Consumer Information and Insurance Oversight, "Premium Adjustment Percentage, Maximum Annual Limitation on Cost Sharing, Reduced Maximum Annual Limitation on Cost Sharing, and Required Contribution Percentage for the 2025 Benefit Year," November 15, 2023, at https://www.cms.gov/files/document/2025-papi-parameters-guidance-2023-11-15.pdf .
See 45 C.F.R. §156.420.
Accessed health plan information on January 28, 2025 using publicly available dataset: HIX Compare, Individual Market data are available at https://hix-compare.org/individual-markets.html.