Health Insurance Premium Tax Credit and
Cost-Sharing Reductions
Updated April 9, 2021
Congressional Research Service
https://crsreports.congress.gov
R44425

Health Insurance Premium Tax Credit and Cost-Sharing Reductions

Summary
Certain individuals without access to subsidized health insurance coverage may be eligible for the
premium tax credit (PTC) established under the Patient Protection and Affordable Care Act
(ACA; P.L. 111-148, as amended) and amended under the American Rescue Plan Act of 2021
(ARPA, P.L. 117-2) 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 some amount toward the purchase of health insurance.
In order to be eligible to receive the premium tax credit in 2021, 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 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 health insurance. They operate in
every state and the District of Columbia.
The PTC is refundable, 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 advanceable, 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 of insurance premiums, automatical y
reducing consumer costs associated with purchasing insurance. The credit is financed through
permanent appropriations authorized under the federal tax code.
Individuals who receive premium 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 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. Although applicable health plans must provide these CSRs, such plans no longer receive
direct payments to reimburse them for the cost of providing the subsidies to eligible consumers.
The ARPA makes temporary changes to the PTC and to CSRs. Its provisions amend statute to
 expand eligibility for and the amount of the PTC applicable to certain exchange
plans for tax years 2021 and 2022;
 suspend the requirement, for tax year 2020, that individuals pay back PTC
amounts that were provided in excess; and
 expand eligibility for and the calculation of both the PTC and CSRs for
individuals who receive unemployment compensation during calendar year 2021.
This report describes current law (including the ARPA’s temporary changes) and applicable
regulations and guidance, specifical y how the PTC and CSR requirements apply in 2021.
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Health Insurance Premium Tax Credit and Cost-Sharing Reductions

American Rescue Plan Act of 2021
This report reflects provisions enacted under the American Rescue Plan Act of 2021 (ARPA; P.L. 117-2)
that make temporary changes to the premium tax credit (PTC) and cost-sharing reductions (CSRs). The
ARPA’s provisions amend statute to

expand eligibility for and the amount of the PTC applicable to certain exchange plans for tax years
2021 and 2022;

suspend the requirement, for tax year 2020, that individuals pay back PTC amoun ts that were
provided in excess; and

expand eligibility for and the calculation of both the PTC and CSRs for individuals who receive
unemployment compensation during calendar year 2021.
This report describes current law and applicable regulations and guidance, specifical y how the PTC and
CSR requirements apply in 2021. As of the date of publication of this report, the Internal Revenue Service
(IRS) had posted minimal guidance with respect to implementation of the ARPA’s PTC provisions. On
March 23, 2021, the Centers for Medicare & Medicaid Services (CMS) posted general questions and
answers about accessing the enhanced PTC benefits through the exchanges; this document did not address
the enhanced CSRs. Implementation guidance is discussed in relevant sections of this report.
Sources: IRS, “The Premium Tax Credit - The Basics,” at https://www.irs.gov/affordable-care-act/
individuals-and-families/the-premium-tax-credit-the-basics; IRS, “IRS Suspends Requirement to Repay
Excess Advance Payments of the 2020 Premium Tax Credit; Those Claiming Net Premium Tax Credit
Must File Form 8962,” April 9, 2021, at https://www.irs.gov/newsroom/irs-suspends-requirement-to-
repay-excess-advance-payments-of-the-2020-premium-tax-credit-those-claiming-net-premium-tax-
credit-must-file-form-8962; and CMS, “Extended Access Opportunity to Enrol in More Affordable
Coverage Through HealthCare.gov,” at https://www.cms.gov/newsroom/fact-sheets/extended-access-
opportunity-enrol -more-affordable-coverage-through-healthcaregov.
Notes: Fol owing ARPA enactment, the IRS indicated on its PTC webpage that the agency is
reviewing the ARPA’s tax provisions and wil “provide more details soon.” On April 9, 2021, the IRS
provided guidance about the APRA provision that suspends repayment of excess credit for tax year
2020 only.
Background
Certain individuals and families without access to subsidized health insurance coverage may be
eligible for a premium tax credit (PTC). This credit, authorized under the Patient Protection and
Affordable Care Act (ACA; P.L. 111-148, as amended) and amended under the American Rescue
Plan Act of 2021 (ARPA; P.L. 117-2), applies toward the cost of purchasing specific types of
health plans offered by private health insurance companies.1 Individuals who receive PTC
payments also may be eligible for subsidies that reduce cost-sharing expenses.2
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.
Exchanges operate in every state and the District of Columbia (DC).3 Exchanges are not
insurance companies; rather, they are marketplaces that offer private health plans to qualified
individuals and smal businesses. The ACA specifical y requires exchanges to offer insurance
options to individuals and to smal businesses, so exchanges are structured to assist these two

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); and §§9661-9663 of the American Rescue Plan Act of 2021 (ARPA, P.L. 117-2).
2 ACA §1402; and new §18071 of the Public Health Service Act (PHSA).
3 For additional background about the exchanges, see CRS Report R44065, Overview of Health Insurance Exchanges.
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Health Insurance Premium Tax Credit and Cost-Sharing Reductions

different types of customers. Consequently, each state has one exchange to serve individuals and
families (an individual exchange) and another to serve smal businesses (a Small Business Health
Options Program, or SHOP, exchange).
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
to the determination of premiums for exchange plans (rating restrictions). Insurance companies
are prohibited from using health factors in determining premiums. However, they are al owed to
vary premiums by age (within specified limits), geography, number of individuals enrolling in a
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 from individual to
individual. Individuals who are eligible for the premium credit general y are required to
contribute some amount toward the purchase of their health insurance.
The PTC is refundable, 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 advanceable, so
individuals may choose to receive the credit in advance of filing taxes on a monthly basis to
coincide with the payment of insurance premiums (technical y, advance payments go directly to
insurers). Advance payments (or APTC) automatical y reduce monthly premiums by the credit
amount. Therefore, the direct cost of insurance to an individual or family APTCs general y wil
be lower than the advertised cost for a given exchange plan.
Eligibility
In order to be eligible to receive the PTC, individuals must meet the following criteria:
 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
(FPL)5 for tax year 2021;6 and
 not be eligible for minimum essential coverage (see the “Not Eligible for
Minimum Essential Coverage” section in this report), with exceptions.
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 T he guidelines that designate the federal poverty level (FPL) are used in various federal programs for eligibility
purposes. T he 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 expands eligibility for the premium tax credit (PT C) by temporarily eliminating the phaseout for
households with annual incomes above 400% FPL. Elimination of the phaseout applies to tax years 2021 and 2022. The
phaseout would resume beginning in 2023.
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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
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
incomes are at levels that normal y do not necessitate the filing of such returns.
Married couples are required to file joint tax returns to claim the premium credit, with some
exceptions. The calculation and al ocation 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).7
Enroll in a Plan Through an Individual Exchange
Premium credits are available only to
individuals and families enrolled in plans
Actuarial Value and Metal Plans
offered through individual exchanges;
Most health plans sold through exchanges established
premium credits are not available through
under the ACA are required to meet actuarial value
SHOP exchanges. Individuals may enroll in
(AV) standards, among other requirements. AV is a
exchange plans if they (1) reside in a state in
summary measure of a plan’s generosity, expressed as
which an exchange was established; (2) are
the percentage of medical expenses estimated to be paid
by the insurer for a standard population and set of
not incarcerated, except individuals in
al owed charges. In other words, the higher the
custody pending the disposition of charges;
percentage, the lower the cost sharing, on average, for
and (3) are citizens or have other lawful
the population. AV is not a measure of plan generosity
status.8
for an enrol ed individual or family, nor is it a measure of
premiums or benefits packages.
Undocumented individuals (individuals
An exchange plan that is subject to the AV standards is
without proper documentation for legal
given a precious metal designation: platinum (AV of
residence) are prohibited from purchasing
90%), gold (80%), silver (70%), or bronze (60%).
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. Although certain
individuals are not eligible to enroll in exchanges due to incarceration or legal status, their family
members may stil receive the PTC as long as those family members meet al eligibility criteria.

7 See IRS, “Health Insurance Premium T ax Credit: Final Regulations,” 77 Federal Register 30377, May 23, 2012.
8 Generally, enrollment through individual exchanges is restricted to a certain time period: an open enrollment period
(OEP). T he 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, individuals may enroll in exchange plans outside of the OEP. For
individuals who experience a “triggering event” during the plan year, exchanges are required to provide a “special
enrollment period” (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. 155.40, at https://www.govinfo.gov/content/pkg/CFR-2013-title45-vol1/xml/CFR-
2013-title45-vol1-sec155-420.xml. T he Biden Administration announced an extended SEP for individuals to enroll in
health plans through federally operated exchanges. Consumers have until August 15, 2021 , to enroll in applicable
exchanges under the extended SEP; see CMS, “ 2021 Special Enrollment Period Access Extended to August 15 on
HealthCare.gov for Market place Coverage,” March 23, 2021, at https://www.cms.gov/newsroom/press-releases/2021-
special-enrollment-period-access-extended-august-15-healthcaregov-marketplace-coverage. On a related topic, the
Department of Labor (DOL) announced that individuals who lose access to the temporary subsidy authorized under the
ARPA, which pays the premiums for coverage established under the Consolidated Omnibus Budget Reconciliation Act
(COBRA), may qualify for a separate SEP. T he SEP would allow such individuals to enroll in exchange plans and
possibly receive the PT C. For additional information about this COBRA-related SEP, see DOL, “ FAQs About COBRA
Premium Assistance Under the American Rescue Plan Act of 2021,” April 7, 2021, at https://www.dol.gov/sites/
dolgov/files/EBSA/about -ebsa/our-activities/resource-center/faqs/cobra-premium-assistance-under-arp.pdf.
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Have Annual Household Income at or Above 100% of the Federal Poverty
Level
Individuals general y must have household income (based on FPL) that meets a minimum level to
be eligible for the PTC in 2021, as specified under the ARPA. 9 Household income is measured
according to the definition for modified adjusted gross income (MAGI).10 An individual whose
MAGI is at or above 100% FPL may be eligible to receive the PTC for tax year 2021.11
Table 1 displays the income levels that correspond to the eligibility criteria for the PTC in 2021
(using poverty guidelines updated by the Department of Health and Human Services [HHS] for
2020).12
Table 1. Income Levels Applicable to Eligibility for the Premium Tax Credit for 2021,
by Selected Family Sizes
(based on 2020 HHS poverty guidelines)
Income Levels Equivalent to 100% FPL
Number of
Persons
48 Contiguous States
in Family
and DC
Alaska
Hawaii
1
$12,760
$15,950
$14,680
2
$17,240
$21,550
$19,830
3
$21,720
$27,150
$24,980
4
$26,200
$32,750
$30,130
Source: Congressional Research Service (CRS) computations based on Department of Health and Human
Services (HHS), “Annual Update of the HHS Poverty Guidelines,” 85 Federal Register 3060, January 17, 2020, at
https://www.govinfo.gov/content/pkg/FR-2020-01-17/pdf/2020-00858.pdf.
Notes: For 2021, the income levels used to calculate premium credit eligibility and amounts are based on 2020
HHS poverty guidelines. The poverty guidelines are updated annual y for inflation. FPL = Federal Poverty Level.
DC = District of Columbia.

9 T here are exceptions to the lower bound income threshold at 100% FPL. One exception relates to the state option
under the ACA to expand Medicaid for individuals with income up to 138% FPL. If a state chooses to undertake the
ACA Medicaid expansion (or has already expanded Medicaid above 100% FPL), eligibility for premium credits 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% FPL, some low-income residents in those states are ineligible for both premium credits and
Medicaid.) Another exception is for lawfully present aliens with incomes below 100% FPL, who are not eligible for
Medicaid for the first five years that they are lawfully present. T he ACA established §36B(c)(1)(B) of the IRC to allow
such lawfully present aliens to be eligible for premium credits. Lastly, the final regulation on premium credits provided
a special rule for credit recipients whose incomes at the end of a given tax year end up being less than 100% FPL. Such
individuals will continue to be considered eligible for the PT C 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 premium tax credits.
11 ARPA §9661 expands eligibility for the PT C by temporarily eliminating the phaseout for households with annual
incomes above 400% FPL. Elimination of the phaseout applies to tax years 2021 and 2022. T he phaseout would resume
beginning in 2023.
12 T he 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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In addition to individuals who meet the applicable income levels listed in Table 1, the ARPA
provides special access to individuals who receive unemployment compensation (UC).13 It deems
individuals who receive UC for any week in calendar year 2021 to have met the PTC income
eligibility criteria for tax year 2021. For these individuals, the ARPA also temporarily adjusts the
calculation of the PTC amount (see the discussion about this calculation in the “Determination of
Required Premium Contributions and Premium Tax Credit Amounts” section of this report).
Not Eligible for Minimum Essential Coverage
To be eligible for a premium credit, an individual may not be eligible for minimum essential
coverage (MEC), with exceptions (described below). The ACA broadly defines MEC to include
Medicare Part A; Medicare Advantage; Medicaid (with exceptions); the State Children’s Health
Insurance Program (CHIP); Tricare; Tricare for Life, a health care program administered by the
Department of Veterans Affairs; the Peace Corps program; any 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 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 a state high-risk pool)
recognized by the HHS Secretary.14
However, the ACA provides certain exceptions regarding eligibility for MEC and PTC. An
individual may be eligible for premium credits even if he or she is eligible for any of the
following sources of MEC:
 the individual (non-group) health insurance market;15
 an employer-sponsored health plan that is either unaffordable or inadequate;16 or
 limited benefits under the Medicaid program.17
Medicaid Expansion
Under the ACA, states have the option to expand Medicaid eligibility to include al non-elderly,
nonpregnant individuals with incomes up to 138% FPL.18 If an individual who applied for
premium credits through an exchange is determined to be eligible for Medicaid, the exchange
must have that individual enrolled in Medicaid instead of an exchange plan. Therefore, in states
that implemented the optional Medicaid expansion to include individuals with incomes at or
above 100% FPL (or any state that decided to expand eligibility to individuals irrespective of the
ACA’s Medicaid expansion provisions), premium credit eligibility begins at the income level at
which Medicaid eligibility ends.

13 See ARPA §9663. With respect to this provision, unemployment compensation (UC) references a long-standing
definition in the federal tax code: “any amount received under a law of the United States or of a State which is in the
nature of unemployment compensation” (26 U.S.C. §85(b)). For a discussion of various UC benefits, see CRS Report
R46687, Current Status of Unem ploym ent Insurance (UI) Benefits: Perm anent-Law Program s and COVID-19
Pandem ic Response.
14 See CRS Report R44438, The Individual Mandate for Health Insurance Coverage: In Brief.
15 T he 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.
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 See CRS In Focus IF10399, Overview of the ACA Medicaid Expansion.
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Determination of Required Premium Contributions and Premium
Tax Credit Amounts
Required Premium Contribution Examples
The amount of the PTC varies from individual to individual. Calculation of the credit is based on
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 dependents) is enrolled, and other factors.
For simplicity’s sake, the following formula il ustrates the calculation of the credit:
Standard Plan Premium – Required Premium Contribution = Premium Tax Credit Amount
Premiums are al owed to vary based on a few characteristics of the person (or family) seeking
health insurance. Standard Plan refers to the second-lowest-cost silver plan (see text box in the
“Eligibility” section of this report) in the person’s (or family’s) local area. Required Premium
Contribution refers to the amount that a premium credit-eligible individual (or family) may pay
toward the exchange premium. The required premium contribution is capped according to
household income, with such income measured relative to FPL (see Table 1). The cap requires
lower-income individuals to contribute a smal er share of income toward the monthly premium
for the standard plan, compared with the requirement for higher-income individuals. The required
premium contribution caps typical y are updated through IRS guidance on an annual basis.
However, the ARPA temporarily replaces those caps.19 The ARPA caps that apply in 2021 are
lower than the percentages that applied just prior to enactment of the law (see Figure 1).20
The 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 his or her required contribution. Given
that the premium and required contribution vary from person to person, the premium credit
amount likewise varies. An extreme example is when the premium for the standard plan is very
low, 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
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.

19 See ARPA §9661. T he new percentages apply to the PT C for tax years 2021 and 2022. Beginning in 2023, the
annual update to these percentages would revert back to pre-ARPA statute and applicable IRS guidance.
20 By reducing these caps, the ARPA increases the potential premium credit amounts for eligible individuals. While
these lower caps apply across eligible income groups, the benefit is most significant for those with incomes up to 150%
FPL; such individuals may now receive full subsidies to cover standard plan premiums, as illustrated in the
hypothetical examples included in this section of this report.
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Figure 1. Cap on Required Premium Contributions for Individuals Who Are Eligible
for the Premium Tax Credit in 2021
(cap varies by income, as measured relative to the federal poverty level)

Source: Section 9661 of the American Rescue Plan Act of 2021 (ARPA; P.L. 117-2).
Notes: The cap assumes that the individual enrol s in the standard plan (second-lowest-cost silver plan) used to
calculate premium credit amounts. If the individual enrol s in an exchange plan that is more expensive than the
standard plan, the individual would be responsible for paying any premium amount that exceeds the calculated
credit amount.
The ARPA applies these percentages to tax years 2021 and 2022. Prior to ARPA enactment, the percentages for
2021 ranged from 2.07% to 9.83%. By reducing the percentages to the current range of 0.0% to 8.5%, the ARPA
reduced the required premium contributions for credit-eligible individuals. In effect, these reduced percentages
result in larger credit amounts compared to what they would have been prior to ARPA enactment .
To il ustrate the premium credit calculation for 2021, consider a premium credit eligible
individual living in Lebanon, KS—the geographic center of the continental United States—with
household income of $19,140 (150% FPL, according to applicable regulations). For 2021, such
an individual would be required to contribute 0.0% of that income toward the premium for the
standard plan in his or her local area (see Figure 1). In other words, the individual would have a
zero dollar premium if he or she enrolled in the standard plan. In contrast, an individual residing
in the same area with income of $31,900 (250% FPL) would be 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 standard plan would be $1,276 (that is, $31,900 x 4.0%) for the year, or
approximately $106 per month.21
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
with household income of $32,580 in 2021. For a family of this size, this income is equivalent to
150% FPL for premium credit purposes. Just as in the example above of the individual with
income at 150% FPL, this family would be required to contribute 0.0% of its annual income
toward the premium for the standard plan in its local area.

21 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 Kaiser Family Foundation, “ Health Insurance
Marketplace Calculator,” at http://kff.org/interactive/subsidy-calculator/.
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In addition to calculating a given individual’s credit amount according to the formula discussed
above, the ARPA includes a special rule specifical y for UC beneficiaries. As discussed in the
“Eligibility” section of this report, ARPA deems individuals who receive UC for any week in
calendar year 2021 to have met the PTC income eligibility criteria for tax year 2021. The law also
disregards household income (i.e., MAGI as applicable to the PTC) that exceeds 133% FPL.
Income at or below that level qualifies for a zero-dollar premium for the standard plan (see
Figure 1), similar to the preceding calculations for the hypothetical individual and family with
incomes at 150% FPL.
General y, the arithmetic difference between the premium and the individual’s (or family’s)
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) wil change the
premium credit amount; such factors include age, family size, and choice of metal plan.
Reconciliation of Advance Premium Tax Credit Payments
As mentioned previously, an eligible individual (or family) may receive advance payments of the
premium credit to coincide with when insurance premiums are due. For such an individual, the
advance premium tax credit (APTC) is provided on a monthly basis and the amount is calculated
using an estimate 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
should have received, based on actual income, as determined on the tax return.
If an individual’s income decreased during the year and he or she should have received a larger
tax credit, the additional credit amount wil be included in the individual’s tax refund for the year
or used to reduce the amount of taxes owed.
If an individual’s income increased during the year and he or she received too much in APTC
payments, the excess amount general y wil be repaid in the form of a tax payment, with a
temporary exception. The ARPA suspends the requirement to repay excess APTC for the 2020 tax
year.22 On April 9, 2021, the IRS provided guidance regarding implementation of this provision.
Individuals who would have had to pay back an excess amount and have not yet filed their 2020
tax returns are not required to file an excess amount on their returns or to file Tax Form 8962.
(Form 8962 is the form used by a tax filer to claim the PTC. Using the form, the tax filer
calculates the PTC amount based on the actual income level from the tax return and reconciles the
PTC amount with the total APTC amount already received, which was calculated using an
income estimate.) Individuals who would have had to pay back an excess amount and already
filed their 2020 tax returns are not required to file an amended return. The IRS wil directly
amend the returns that have already been filed to reimburse those individuals for any excess
APTC repaid for the 2020 tax year, without any additional action required by the relevant tax
filers.23
For individuals with incomes below 400% FPL (other than tax year 2020), any repayment amount
is capped, with greater tax relief provided to individuals with lower incomes (see Table 2).

22 See ARPA §9662.
23 IRS, “IRS Suspends Requirement to Repay Excess Advance P ayments of the 2020 Premium T ax Credit; T hose
Claiming Net Premium T ax Credit Must File Form 8962,” April 9, 2021, at https://www.irs.gov/newsroom/irs-
suspends-requirement -to-repay-excess-advance-payments-of-the-2020-premium-tax-credit -those-claiming-net-
premium-tax-creditmust -file-form-8962.
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Table 2. Annual Limits on Repayment of Excess Premium Tax Credits, 2021
Household Income (Expressed as a Percentage
Applicable Dollar Limit for
of the Federal Poverty Level)
Unmarried Individualsa
Less Than 200%
$325
At Least 200% But Less Than 300%
$800
At Least 300% But Less Than 400%
$1,350
Source: IRS, Internal Revenue Bul etin 2020-46, at https://www.irs.gov/irb/2020-46_IRB.
Notes: The applicable dol ar limit for al other tax filers is twice the limit for unmarried individuals.
a. 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 “Statistics of Income” (SOI)
reports. The most recently published SOI report is for tax year 2018.24 The following data provide
summary statistics about two overlapping populations: tax households that received APTC, and
households that claimed the credit on their individual income tax returns.25
Tax Year 2018
For tax year 2018, around 6 mil ion tax returns indicated receipt of advance payments of the tax
credit, totaling to almost $46.1 bil ion. Of those 6 mil ion returns, nearly 2.3 mil ion tax
households received advance payments that were less than what they were eligible for, and
approximately 3.2 mil ion tax households received advance payments that were more than what
they were eligible for.26 The remaining difference represents households that received the correct
amount in APTC.
The SOI data indicate that approximately 5.4 mil ion tax returns for the 2018 tax year claimed a
total of nearly $41.8 bil ion of tax credit. The 5.4 mil ion returns represent the number of tax
households that were actual y eligible for the credit, based on the information provided in the
2018 tax returns.27 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.28 The IRS also has
published limited tax credit data by state, county, and zip code.29

24 T he 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,” T able 2.7, at
https://www.irs.gov/statistics/soi-tax-stats-individual-income-tax-returns-publication-1304-complete-report.
25 T he SOI report does not include all estimates of tax credit recipients and claimants necessary to fully describe the
overlap of these two taxpayer populations.
26 T he 3.2 million taxpayers who received excess advanced payments paid back a total of approximately $4.4 billion.
27 T he number of taxpayers who received advance payments exceeded the number who were eligible for the credits,
indicating that some taxpayers received unauthorized credits. T he IRS did not include, in the SOI report, an estimate of
the number of taxpayers who received unauthorized credits.
28 T he 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.
29 See IRS, “ACA Data from Individuals,” at https://www.irs.gov/statistics/soi-tax-stats-affordable-care-act-aca-
statistics-individual-income-tax-items.
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Health Insurance Premium Tax Credit and Cost-Sharing Reductions

Enrollment Data
HHS regularly publishes data on persons selecting and enrolling in exchange plans, including
individuals who were determined eligible for the PTC. For plan year 2020, HHS made reports
and public-use files available with national enrollment data, as wel as limited data by state,
county, and zip code.30 During the 2020 open enrollment period, approximately 87% of al
exchange enrollees were eligible for the tax credit.31 As of the publication date of this report,
HHS had not yet published comparable data for plan year 2021.
Cost-Sharing Reductions
An individual who qualifies for the PTC, is enrolled in a silver plan (see text box above,
“Actuarial Value and Metal Plans”), and has annual household income no greater than 250% FPL
(a temporary exception is provided for individuals who receive UC; see below) is eligible for
cost-sharing reductions (CSRs).32 The purpose of these CSR subsidies is to reduce an individual’s
(or family’s) expenses related to cost-sharing requirements under the silver plan; such
requirements may include deductibles, co-payments, coinsurance, and annual cost-sharing
limits.33 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
both types of subsidies, as long as they meet the applicable eligibility requirements.
In addition to individuals who meet the CSR eligibility requirements described below, the ARPA
provides special access to individuals who receive UC. It deems individuals who receive UC for
any week in calendar year 2021 to have met the CSR income eligibility criteria for plan year
2021.34 The ARPA also disregards any household income above 133% FPL in 2021, which
provides UC beneficiaries with the greatest level of cost-sharing assistance (see description of
CSRs by income band below).
The ACA requires the HHS Secretary to provide full reimbursements to insurers that provide
CSRs. Federal outlays for such reimbursements totaled the following amounts:
 FY2014: $2.111 bil ion
 FY2015: $5.382 bil ion
 FY2016: $5.652 bil ion
 FY2017: $7.317 bil ion
 FY2018-FY2020: $035

30 CMS, “2020 Marketplace Open Enrollment Period Public Use Files,” at https://www.cms.gov/index.php/Research-
Statistics-Data-and-Systems/Statistics-T rends-and-Reports/Marketplace-Products/2020-Marketplace-Open-Enrollment-
Period-Public-Use-Files.
31 See CMS, “Health Insurance Exchanges 2020 Open Enrollment Report,” April 1, 2020, at https://www.cms.gov/
files/document/4120-health-insurance-exchanges-2020-open-enrollment -report-final.pdf.
32 ACA §1402.
33 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-paym ent is a fixed dollar amount an insured consumer pays for a
covered health service. An annual cost-sharing lim it 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.
34 ARPA §2305.
35 Data provided to CRS by the IRS Budget Office.
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Although the ACA authorized the cost-sharing subsidies and payments to reimburse insurers, it
did not address the financing for such payments. The Obama Administration provided CSR
payments to insurers using an existing appropriation that finances the PTC (among other tax
benefits). The House of Representatives filed suit in 2014, claiming the payments violated the
appropriations clause of the U.S. Constitution. After holding that the House has standing to sue
the Obama Administration, the U.S. District Court for the District of Columbia concluded that
payments for CSRs were unconstitutional for lack of a valid appropriation enacted by Congress.
The court barred the Obama Administration from making the payments but stayed its decision
pending appeal of the case. Following the November 2016 election, the court delayed the case to
al ow for nonjudicial resolution, including possible legislative action. Congress did not provide
appropriations, and on October 13, 2017, the Trump Administration filed a notice announcing it
would terminate payments for these subsidies beginning with the payment that was scheduled for
October 18 of that year. In response, attorneys general of 18 states and DC filed suit in the U.S.
District Court for the Northern District of California chal enging HHS’s decision to terminate
CSR payments.36
Despite the administrative decision to terminate CSR payments, such decision provides no relief
to insurers that continue to be required under federal law to provide CSRs to eligible individuals.
In response, health insurers increased premiums to offset this loss in reimbursements (if permitted
by state insurance regulators); this practice is referred colloquial y as silver loading.37
As part of the legal chal enges related to CSR payments, the Federal Circuit Court of Appeals
concluded that insurers were “entitled to recover unpaid cost-sharing reduction (CSR) payments
that the Trump Administration withheld, but only to the extent insurers had not recouped their
losses through higher premiums.”38 The practice of silver loading is protected under federal law
through plan year 2021.39
Reduction in Annual Cost-Sharing Limits
Each metal plan limits the total dollar amount an insured consumer wil be required to pay out of
pocket for use of covered services in a plan year (referred to as an annual cost-sharing limit in
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.40 For 2021, the annual cost-sharing limit for
self-only coverage is $8,550; the corresponding limit for family coverage is $17,100.41 One type
of cost-sharing assistance reduces such limits (see Table 3). This CSR reduces the annual limit
faced by premium credit recipients with incomes up to and including 250% FPL; greater subsidy
amounts are provided to those with lower incomes. In general, this cost-sharing assistance targets

36 For a discussion of legal considerations related to the termination of CSR payments, see CRS Legal Sidebar
LSB10018, Departm ent of Health and Hum an Services Halts Cost-Sharing Reduction (CSR) Paym ents.
37 For background on silver loading, see Bipartisan Policy Center, “Stabilizing the Individual Insurance Market: What
Happened and What Next?,” March 2018, at https://bipartisanpolicy.org/wp-content/uploads/2019/03/BPC-Health-
Stabilizing-T he-Individual-Health-Insurance-Market.pdf.
38 Aviva Aron-Dine and Christen Linke Young, “Silver-Loading Likely to Continue Following Federal Circuit
Decision on CSRs,” Health Affairs, October 13, 2020, at https://www.healthaffairs.org/do/10.1377/
hblog20201009.845192/full/.
39 §609 of the Further Consolidated Appropriations Act, 2020, P.L. 116-94.
40 T he 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.
41 See “Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2021; Notice
Requirement for Non-Federal Governmental Plans,” 85 Federal Register 29164, May 14, 2020, at
https://www.govinfo.gov/content/pkg/FR-2020-05-14/pdf/2020-10045.pdf.
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individuals and families that use a great deal of health care in a year and, therefore, have high
cost-sharing expenses. Enrollees who use very little health care may not generate enough cost-
sharing expenses to reach the annual limit.
Table 3. ACA Cost-Sharing Reductions: Reduced Annual Cost-Sharing Limits, 2021
Annual Cost-Sharing Limits
Household Income Tier,
by Federal Poverty Level
Self-Only Coverage
Family Coverage
100% to 150%
$2,850
$5,700
Greater Than 150% to 200%
$2,850
$5,700
Greater Than 200% to 250%
$6,800
$13,600
Source: Department of Health and Human Services (HHS), “Patient Protection and Affordable Care Act; HHS
Notice of Benefit and Payment Parameters for 2021; Notice Requirement for Non -Federal Governmental Plans,”
85 Federal Register 29164, July 13, 2020, at https://www.govinfo.gov/content/pkg/FR-2020-05-14/pdf/2020-
10045.pdf.
Note: 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
income at 150% FPL (as discussed in the “Required Premium Contribution Examples” section of
this report). A person eligible to receive CSRs at that income level would face an annual cost-
sharing limit of $2,850, compared to an annual limit of $8,550 for someone also enrolled in a
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 covered services received by
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
this financial assistance.
Reduction in Cost-Sharing Requirements
The second type of CSR also applies to premium credit recipients with incomes up to and
including 250% 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
al owed 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 (Table 4). In other
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
deductible), both enrollees who use minimal health care and those who use a great deal of
services may benefit from this assistance.
Table 4. ACA Cost-Sharing Reductions: Increased Actuarial Values
Household Income Tier,
New Actuarial Values for Cost-
by Federal Poverty Level
Sharing Subsidy Recipients
100% to150%
94%
Greater Than 150% to 200%
87%
Greater Than 200% to 250%
73%
Source: 45 C.F.R. §156.420.
Note: ACA = Patient Protection and Affordable Care Act (P.L. 111-148, as amended).
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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, “Actuarial Value and Metal Plans”). For an
individual who receives the CSR referred to in Table 4, the health plan wil impose different cost-
sharing requirements so that the silver plan wil 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
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
comply with the higher levels of actuarial value (73%, 87%, and 94%).42 When an individual is
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.
Consider the same hypothetical individual discussed in the previous section. Since this person’s
income is at 150% FPL, if he or she receives this type of subsidy, the silver plan in which he or
she is enrolled wil have an AV of 94% (as indicated in Table 4), instead of the usual 70% AV for
silver plans.

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 n ot 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.

42 See 45 C.F.R. §156.420.
Congressional Research Service
R44425 · VERSION 15 · UPDATED
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