Health Insurance Tax Credit

Can you get the new health insurance tax credit? Read on to see how you can get a tax credit you can get by paying insurance premiums.

Starting in 2014 low and moderate income individuals and families will get a tax credit that will go towards the payments of their health insurance premiums.

This health insurance tax credit will help make health insurance more affordable for people who would otherwise not be able to afford it.

Every household that has an income below 400% of the poverty line will not have to pay more than a certain percent of their income towards health insurance. This percent called maximum premium contribution will range from 2% for those earning less than 133% of poverty to 9.5% for 300% - 400% of poverty.

To receive the Premium Tax Credit you will need to purchase a health insurance plan within the Health Insurance Exchange.

    Each state will have an Affordable Insurance Exchange where consumers can purchase low cost health insurance.

    Health insurance companies will offer four levels of health insurance coverage:

    -"Bronze" will offer 60% coverage
    -"Silver" will offer 70% coverage
    -"Gold" will offer 80% coverage
    -"Platinum" will offer 90% coverage

    Consumers will be able to decide how much coverage they need and minimize the health insurance premium costs accordingly.

Regardless which plan you choose the credit amount will be the difference between the maximum premium contribution and the actual insurance premiums of the "silver" plan for your local area. You can still choose a more expensive or cheaper plan within the exchange and your credit will stay the same (as if you're purchasing the silver plan).

This health insurance premiums tax credit will become available in 2014. You will be able to start receiving the credit as soon as you apply for the plan. Like this you will not have to wait until the end of the tax year when you file your tax return to get the credit. The credit will go directly towards the premium and you will not have to lay out any extra money.

When more information will be available on how to claim this credit we will post it here.

Updated October 17, 2012

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