What is APTC Exhaustion?
One type of financial help you can get if you enroll in a Vermont Health Connect plan is called “advance premium tax credits”, or APTC. You can get APTC if your income is below 400% of the Federal Poverty Level (FPL) and you meet other eligibility criteria.
The premium tax credit program is run by the Internal Revenue Service (IRS). If eligible, you can choose to take premium tax credits in advance to reduce the cost of your health insurance premiums. When you apply for financial help, Vermont Health Connect will estimate your total amount APTC for the year. Your total APTC amount can change when you have changes to your income or the size of your tax household. It’s important to let Vermont Health Connect know when these changes happen so you can get the right APTC amount.
If you report a change to Vermont Health Connect and your total yearly APTC amount changes, you might have something called “APTC exhaustion.” APTC exhaustion happens when your income goes up and your yearly tax credit amount goes down.
Example of ATPC exhaustion:
- Jim gets APTC of $500 per month that starts with January’s premium. Based on his income at that time, Jim’s total yearly APTC bank is $6,000.
- Jim uses $3,000 to lower his premiums from January to June. Jim has $3,000 left in his yearly APTC bank after paying the June premium.
- In June, Jim reports a big raise to Vermont Health Connect. Jim’s APTC bank for the year is now $4,800, because a change in APTC is applied to the whole year, no matter when it happens.
- Because Jim’s annual income is now higher, Jim’s yearly APTC bank is now $4,800 per year—or $400 per month. Jim has already used $3,000, so he has $1,800 left in his APTC bank for the year.
- Jim divides the $1,800 left in his APTC bank by the number of months left in the year to find out how much APTC he can use each month without going over his total yearly APTC bank. From July to December, Jim can use $300 per month in APTC.
When you file federal taxes each year, the IRS will compare the APTC you used to the APTC you were eligible for based on the income you report on your tax return. If you made more money than you told VHC you would, you may have to pay back some of your APTC when you file taxes.
If you have questions about how to report income changes or APTC, call the Customer Service Center at 1-855-899-9600 or speak with an in-person assister.