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Income Reporting and Advanced Premium Tax Credits (APTC) Repayment

Income Reporting and APTC Repayment

When you apply for health coverage and financial help from Vermont Health Connect, you will be asked to estimate your income for the upcoming year. One type of financial help is called “premium tax credits.” Premium tax credits can be taken in advance during the year to reduce your health insurance premiums.

If you qualify, you can choose to take your premium tax credits either:

  1. In advance, so you pay less each month for your health insurance premium;
  2. At the end of the year when you file your taxes; or
  3. Part in advance, and part at the end of the year when you file taxes.

When you take premium tax credits before you file your federal income taxes, they are called “advance premium tax credits”, or APTC. Estimating your income in advance can be tricky—especially if your income changes during the year. If your total yearly income at the end of the year is more than you expected, you may have to pay back some of your premium tax credits when you file your federal income taxes. Your household size and income might limit the amount you have to repay (see table below).

Tax Year 2020 Repayment Limits for Advance Premium Tax Credits
Household Income as a Percentage of Federal Poverty Level (FPL) Annual Income for an Individual Maximum Repayment for a Single Person Annual Income for a Family of Four Maximum Repayment for Married Taxpayers Filing Jointly
<200% <$24,980 $325 <$51,500 $650
200-299% $24,980 - $37,469 $800 $51,500 - $77,249 $1,600
300-399% $37,470 to $49,959 $1,350 $77,250 to $102,999 $2,700
400% $49,960 Full Amount $103,000 Full Amount

 

  • If you earned more than you estimated: If the income you report on your taxes is higher than the income you reported on your Vermont Health Connect application, you may need to pay back some of your APTC.  If the income you report on your taxes is more than 400% FPL, you will need to pay back the full amount of APTC you received.
  • If you earned less than you estimated: you might have more premium tax credits available to you. In that case, you will get the rest of your premium tax credits when you file your federal income taxes.  

Report Every Income Change

Please report income changes to Vermont Health Connect when they happen. If you report an income increase during the year, you may have something called “APTC exhaustion”. When you have APTC exhaustion, Vermont Health Connect will adjust your monthly APTC amount to help you avoid owing money back when you file your federal income taxes. It also means your monthly premium bill will be higher because you're getting less financial help.

You can also choose to pay your full monthly premium each month through the end of the year. That way, you can claim all your premium tax credits at once when you file your federal taxes.

If your employer offers you a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) to help lower your household’s health care costs, you can reduce the amount of APTC you get by the amount of the QSEHRA.  When Vermont Health Connect asks how much APTC you want to use to lower your monthly premium, subtract your monthly QSEHRA amount from your total APTC amount. This will help you avoid owing money when you file taxes.