The public exchange plan users who are getting advance premium tax credit (APTC) help have to file tax returns to keep their APTC subsidies.
Health care tax service marketers at H&R Block (NYSE:HRB), a tax preparation firm, are wondering whether APTC users understand the return filing requirement.
Drafters of the Patient Protection and Affordable Care Act (PPACA) created the premium tax credit system to help people with income under 400 percent of the federal poverty level, and too high for Medicaid, pay for private exchange plan coverage.
Exchange plan users can choose between waiting to get the tax credit for a year when they file their tax returns for that year, or getting the tax credit in advance, while the year is still under way, based on estimates of how much they might earn.
When exchange plan users get the tax credit in advance, they are supposed to file a new tax return, Form 8962, to reconcile the APTC payments made based on the income estimates with the amounts justified by the recipients’ actual income.