Advanced Premium Tax Credit

An advanced premium tax credit is a monthly premium subsidy for qualifying enrollees within Affordable Care Act health plans. Enrollees with income ranging from 100 percent to 400 percent of the Federal Poverty Level may qualify for this subsidy. The tax credit (subsidy) is applied against the enrollee’s current premium based on the enrollee’s assumption about his or her income for the year. An advanced premium tax credit is also known as “APTC” or “subsidy.”

Consumers who do not qualify for the tax credit are often described as “unsubsidized.” These consumers pay the full cost of their health insurance without any premium reduction effected by the government.

The APTC is larger for enrollees making the lowest amounts within the income eligibility range for premium subsidies (100 percent to 133 percent of the Federal Poverty Level) and smallest for those making the most within that range (between 300 percent and 400 percent of the Federal Poverty Level).

87 percent of 2019 plan year enrollees on Healthcare.gov, the main governmental marketplace for Affordable Care Act health plans, received subsidies. Before the application of subsidies, the average premium on Healthcare.gov was $621. After premium subsidies for those who qualified, the average post-subsidy premium was $87 in 2019. Together, 7,325,211 enrollees on Healthcare.gov received the Advanced Premium Tax Credit (APTC) in 2019.