CEC Premium Tax Credits & Cost-Sharing Reductions 1 — Questions and Answers
Question 1: What is the Advance Premium Tax Credit (APTC)?
- A tax penalty for not having health insurance
- A subsidy paid in advance to lower monthly Marketplace premiums (Correct answer)
- A reimbursement for out-of-pocket medical costs
- A tax credit only claimed when filing annual returns
Correct answer: A subsidy paid in advance to lower monthly Marketplace premiums
APTC is a federal subsidy paid directly to insurers in advance to reduce the monthly premium cost for eligible Marketplace enrollees.
Question 2: What income range (as a percentage of the Federal Poverty Level) makes a consumer eligible for the Advance Premium Tax Credit?
- 0–100% FPL
- 100–400% FPL (Correct answer)
- 138–400% FPL
- 200–600% FPL
Correct answer: 100–400% FPL
Consumers with household incomes between 100% and 400% FPL (expanded in some years) are eligible for APTC on the Marketplace.
Question 3: Which metal tier plans are eligible for Cost-Sharing Reductions (CSR)?
- Bronze plans only
- Silver plans only (Correct answer)
- Gold and Platinum plans
- Any metal tier plan
Correct answer: Silver plans only
CSR benefits are only available on Silver-tier Marketplace plans, making Silver the only tier where reduced deductibles and copays apply.
Question 4: Which tax form does a consumer receive to reconcile their APTC at tax time?
- Form 1095-A (Correct answer)
- Form W-2
- Form 1040-EZ
- Form 8962 only
Correct answer: Form 1095-A
Form 1095-A is the Health Insurance Marketplace Statement that provides the information needed to reconcile APTC when filing federal taxes.
Question 5: What happens when a consumer's actual year-end income is higher than the income they estimated when enrolling?
- They keep the full APTC with no adjustment
- They may owe back some or all of the excess APTC received (Correct answer)
- They automatically receive a larger credit next year
- Their plan is retroactively terminated
Correct answer: They may owe back some or all of the excess APTC received
If a consumer's income is higher than estimated, reconciliation on Form 8962 may result in repayment of excess APTC received during the year.
Question 6: At what Federal Poverty Level percentage does APTC eligibility begin for most Marketplace consumers?
- 50% FPL
- 100% FPL (Correct answer)
- 133% FPL
- 138% FPL
Correct answer: 100% FPL
APTC eligibility generally starts at 100% FPL for consumers who are not eligible for Medicaid.
CEC Premium Tax Credits & Cost-Sharing Reductions 1
What is the Advance Premium Tax Credit (APTC)?