Premium Tax Credits and Cost Sharing Benefits

The Policies Behind Premium Tax Credits & Cost Sharing Benefits

The Health Insurance Marketplace is one of the avenues to get a reliable health insurance plan. It lays down all the options to get insured while also highlighting the various benefits of an American citizen. Another reason to use the service is premium tax credits.

People may use tax credits to lessen the monthly insurance fees included with a marketplace health plan. A person’s tax credit amount is based on the household side, location, and estimated annual household income.

Who Is Eligible to Use Premium Tax Credits?

Much like other government-sponsored health programs, specific requirements must be met to be considered eligible for premium tax credits. Those with income rates that fall within 100% to 400% of the federal poverty level qualify. 

Eligible individuals have the freedom to use their premium tax credits any way they want. You will actually receive your tax credit when you file your federal tax return for the year. However, to help reduce the out-of-pocket expense of your health insurance, you may choose to use all of your estimated tax credit, use only a portion of it, or even take none at all throughout the year.

When you file your tax return, you will have to reconcile what tax credit advancement you received with the amount you actually should have received (based on your household income).

Some people may end up using more tax credits than are allowed. In this case, they must pay the excess amount back during the filing of taxes. People who have remaining tax credits will receive refundable credit.

People may only use premium tax credits on health insurance plans available through the Health Insurance Marketplace. Once a person submits their application form through the marketplace, their household and salary details will be cross-checked for eligibility.

Besides premium tax credits, applicants will also be screened for cost-sharing reductions.

What Are Cost-Sharing Reductions?

These reductions allow people to pay fewer fees out of their pocket, particularly when undergoing a medical procedure or health care service. If someone is eligible, they will receive reductions based on their estimated income. However, reductions are only available to those with Silver plans through the marketplace. People with less income will receive more benefits.

A significant decrease in your deductible is possible through cost-sharing reductions. Insurance plans will begin coverage of medical bills faster than their usual rate, and the amount one has to pay upfront is reduced by a sizable portion. In addition, coinsurance and copayment costs will also be reduced. This means that check-ups will be cheaper.

The maximum out-of-pocket amount you will have to pay will also be reduced, increasing the insurance plan’s coverage. For sudden emergencies or accidents, this policy can be handy. Emergencies that rack up costs can be a massive burden to finances, but having cost-sharing reductions on the table will help address problems like these.

As one of the most sought-after insurance providers in Utah and nearby areas, Skyline Insurance Agency knows the importance of knowing how much you can save on plans. Health insurance is one of the most necessary expenses a person can make. We remain committed to our clients, and our recommended packages are always tailored to an individual’s capacity.

Let us help take the headache out of your health insurance. Talk with one of our local advisors today.