Health Insurance Premium Tax Credit and Cost-Sharing Reductions

March 23, 2016 – February 14, 2024 R44425

Health Insurance Premium Tax Credit and
February 14, 2024
Cost-Sharing Reductions
Bernadette Fernandez
Certain individuals without access to subsidized health insurance coverage may be
Specialist in Health Care
eligible for the premium tax credit (PTC) established under the Patient Protection and
Financing
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) and the enacted budget
reconciliation measure (P.L. 117-169) (commonly referred to as the Inflation Reduction

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
some amount toward the purchase of private health insurance.
To be eligible to receive the premium tax credit in 2024, 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 private
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
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
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.
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.
The budget reconciliation measure extended the ARPA provisions for three years to sunset at the end of tax year
2025.
This report describes current law and applicable regulations and guidance, specifically with regard to how the PTC and CSR
requirements apply in 2024.
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Health Insurance Premium Tax Credit and Cost-Sharing Reductions

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
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.
Other 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
provided in excess and
•
expanded eligibility for and the calculation of both the PTC and CSRs for individuals who receive
unemployment compensation during calendar year 2021.
The budget reconciliation measure enacted on August 16, 2022 (P.L. 117-169) (commonly referred to as
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 years
to sunset at the end of tax year 2025. The enhanced PTC extension under the reconciliation measure, like
ARPA, provides ful 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
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
income (prorated monthly) before receiving any credit. For some higher-income households, this results in
receiving no credit despite being eligible.
This report describes current law and applicable regulations and guidance, specifically how the PTC and
CSR requirements apply in 2024, and includes historical enrol ment and spending data.
Sources: 26 U.S.C. 36B(b)(3)(A)(i i) 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
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) and the enacted budget reconciliation measure (P.L. 117-
169) (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 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 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
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 individual exchange) and another to serve small 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 allowed 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 for each individual.
Individuals who are eligible for the premium credit generally 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 (technically, advance payments go directly to
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
payments generally will be lower than the advertised cost for a given exchange plan.
Eligibility
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 2024;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 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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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 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
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).7
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
(AV) standards, among other requirements. AV is a
not incarcerated, except individuals in
summary measure of a plan’s generosity, expressed as
custody pending the disposition of charges;
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
allowed charges. In other words, the higher the
status.
percentage, the lower the cost sharing, on average, for
Undocumented individuals (individuals
the population. AV is not a measure of plan generosity
for an enrol ed individual or family, nor is it a measure of
without proper documentation for legal
premiums or benefits packages.
residence) are prohibited from purchasing
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, the cost sharing) they can expect from
from obtaining exchange coverage, these
different plans: platinum (AV of 90%), gold (80%), silver
(70%), or bronze (60%).
individuals are not eligible for the PTC.
Although certain individuals are not eligible
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.
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 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
(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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Have Annual Household Income at or Above 100% of the Federal Poverty
Level
Individuals generally must have household income (based on FPL) that meets a minimum level to
be eligible for the PTC in 2024.9 Household income is measured according to the definition for
modified adjusted gross income (MAGI).10 An individual whose MAGI is at or above 100% of
FPL may be eligible to receive the PTC for tax year 2024.11
Table 1 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 2024 (using poverty guidelines updated by
the Department of Health and Human Services [HHS] for 2023).12
Table 1. Income Levels Applicable to Eligibility for the Premium Tax Credit for 2024,
by Selected Family Sizes
(based on 2023 HHS poverty guidelines)
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
Source: Department of Health and Human Services (HHS), “Annual Update of the HHS Poverty Guidelines,” 88
Federal Register 3424, January 19, 2023, athttps://www.govinfo.gov/content/pkg/FR-2023-01-19/pdf/2023-
00885.pdf.
Notes: For 2024, the income levels used to calculate premium credit eligibility and amounts are based on 2023
HHS poverty guidelines. The poverty guidelines represent annual incomes for families with up to eight members
and 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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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; coverage provided through 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.13
However, the ACA provides certain exceptions regarding eligibility for MEC and PTC. An
individual may be eligible for the credit even if he or she is eligible for any of the following
sources of MEC:
• the individual (nongroup) health insurance market;14
• an employer-sponsored health plan that is either unaffordable15 or inadequate;16
or
• limited benefits under the Medicaid program.17
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
this exception.18 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
plans to family members. Prior to the rule, the determination of family eligibility considered costs
to the employee only even if the family was seeking coverage (this is referred to colloquially as
the “family glitch”). The previous exclusion of family costs in the eligibility determination
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.
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
Under the ACA, states have the option to expand Medicaid eligibility to include all nonelderly,
nonpregnant individuals with incomes up to 138% of FPL.20 If an individual who applied for the
premium credit 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% of 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.21
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.22 For simplicity’s sake, the following formula illustrates the calculation of the credit:
Maximum Credit Amount = Benchmark Plan Premium – Required Premium Contribution
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, Benchmark Plan premium refers
to the premium for 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 the federal poverty level (see Table 1). As household income
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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an annual basis. However, the ARPA and the enacted budget reconciliation measure temporarily
replaced those caps (see Figure 1).23
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 and required contribution vary from person to person, the premium credit amount
likewise varies. An extreme example is 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
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.
In 2024, eligible households with annual incomes between 100% and 150% of FPL receive full
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
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 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.
Figure 1. Cap on Required Premium Contributions for Individuals Who Are Eligible
for the Premium Tax Credit in 2024
(cap varies by income, as measured relative to the federal poverty level)

Source: 26 U.S.C. 36B(b)(3)(A)(i i).
Notes: The cap assumes that the individual enrol s in the benchmark 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
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
percentages to tax years 2021 and 2022. Section 12001 of the enacted budget reconciliation measure (P.L. 117-
169) 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
States—with household income of $21,870 (150% of FPL, according to applicable regulations).
For 2024, 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 (see Figure 1). In other words, the
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 $36,450 (250% of 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 benchmark plan would be $1,458 (that is,
$36,450 x 4.0%) for the year or approximately $122 per month.24
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 $37,290 in 2024. 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
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
same area with income of $62,150 (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
the benchmark plan would be $2,486 ($62,150 x 4.0%) for the year (approximately $207 per
month).25
Generally, 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) will change the
premium credit amount; such factors include age, family size, geographic location, 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 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
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 will 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 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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For individuals with incomes below 400% of FPL, any repayment amount is capped with greater
tax relief provided to individuals with lower incomes (see Table 2).
Table 2. Annual Repayment Limits of Excess Premium Tax Credit Payments, 2024
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 https://www.irs.gov/pub/irs-drop/rp-23-34.pdf.
Notes: The applicable dol ar limit for all 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 2020.26 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.27
Tax Year 2020
For tax year 2020, around 4.4 million tax returns indicated receipt of advance payments of the tax
credit totaling to almost $32.8 billion. Of those 4.4 million returns, approximately 1.7 million tax
households received excess advance payments, while more than 2.2 million tax households
received deficient advance payments.28 The remaining difference represents households that
received the correct amount in APTC.
The SOI data indicate that approximately 4.2 million tax returns for the 2020 tax year claimed a
total of nearly $32.2 billion of tax credit. The 4.2 million returns represent the number of tax
households that were actually eligible for the credit, based on the information provided in the
2020 tax returns.29 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 IRS also has published limited tax credit data by state, county, and zip code.31
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 2023, HHS posted reports
and public-use files available with national enrollment data, as well as limited data by state,
county, and zip code.32 During the 2023 open enrollment period (OEP), approximately 90% of all
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,
“Actuarial Value and Metal Plans”), and has annual household income no greater than 250% of
FPL is eligible for cost-sharing reductions (CSRs).34 The purpose of CSRs 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.35 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.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
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.37 For 2024, the annual cost-sharing limit for
self-only coverage is $9,450; the corresponding limit for family coverage is $18,900.38 One type
of 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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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
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
enough cost-sharing expenses to reach the annual limit.
Table 3. ACA Cost-Sharing Reductions: Reduced Annual Cost-Sharing Limits, 2024
Household Income Tier,
Annual Cost-Sharing Limits
by Federal Poverty Level
Self-Only Coverage
Family Coverage
100% to 150%
$3,150
$6,300
>150% to 200%
$3,150
$6,300
>200% to 250%
$7,550
$15,100
Source: 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.
Notes: 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% of 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 $3,150, compared to an annual limit of $9,450 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% 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
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 (see 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
co-payment), 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%
>150% to 200%
87%
>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 will impose different cost-
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
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%).39 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% 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 in Table 4), instead of the usual 70% AV for
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 $2,500 in
2024. For an individual whose income allows for enrollment in a silver plan with an AV of 94%,
that plan’s deductible is $150.40 Given that a deductible is the amount an insured consumer must
pay for covered health services before the applicable insurer begins to pay for such services (with
exceptions), a lower deductible means the consumer pays less upfront before the insurer pays 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
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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
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