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Important Message: To get health insurance, you must sign up during an enrollment period. Vermont Health Connect has a Special Enrollment Period open now through October 1, and uninsured Vermonters can enroll in a qualified health plan during this time. Under the American Rescue Plan Act, Vermonters can get more financial help when they enroll through Vermont Health Connect. Vermonters who have insurance directly through Blue Cross and Blue Shield of Vermont or MVP Health Care® can transfer their plan to Vermont Health Connect now to get premium tax credits.  Vermonters who are eligible for Medicaid can enroll at any time.

What Happens When Premium Tax Credits Change?

One type of financial help eligible Vermonters can get through Vermont Health Connect is called premium tax credits.  Many Vermonters can get premium tax credits. You can take them:

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

If you choose to take premium tax credits in advance, they’re called advance premium tax credits (APTC). Premium tax credits are part of your federal taxes. If you get too much APTC during the year, you might have to pay it back when you file taxes.

When you apply for financial help, Vermont Health Connect will give you premium tax credits for the year based on the income you think you'll earn all year. When your income or household size changes, your yearly premium tax credit amount can change too.  It’s important to let Vermont Health Connect know when changes happen so you can get the right amount of APTC. 

Changes to your income or household size may change how much premium tax credits you can get. When the American Rescue Plan Act was passed in 2021, it changed premium tax credits for everyone. Here’s what you need to know if your premium tax credits change:

What Happens if APTC Goes Up?

If your total yearly premium tax credit amount goes up, you might have something called APTC surplus. APTC surplus can happen when your income goes down, and your yearly tax credit amount goes up. If you have APTC surplus, you can choose to take your extra tax credits in advance, or at the end of the year when you file taxes.

In 2021 and 2022, most people who enroll in health insurance through Vermont Health Connect will get more premium tax credits than before. This is because the American Rescue Plan gave extra tax credits for two years. The tax credit is counted by the year, so most Vermont Health Connect members get extra money for every month enrolled—starting January 2021.

Example of APTC surplus:

  • Mary has a health insurance plan with a $700 monthly premium. 
  • Mary has a total yearly APTC amount of $6,000. Mary chooses to take all her premium tax credits in advance as APTC, so she gets $500 each month to lower her health insurance premium.
  • Mary uses $500 each month from January to June for a total of $3,000 over six months. She still has $3,000 of her yearly APTC amount left.
  • Mary loses one of her jobs in June, so her income goes down. She calls Vermont Health Connect and learns her yearly APTC amount went up to $7,800 because her income went down. This means she can take more APTC each month to lower her health insurance premium.
  • Mary already used $3,000, so she has $4,800 of her yearly APTC amount left. Vermont Health Connect divides $4,800 by the number of months left in the year (six). 
  • Mary can use up to $800 per month in APTC from July through December. 
  • Mary’s APTC pays her $700 monthly health insurance bill through December. She will get any extra premium tax credits when she files taxes at the end of the year. 

What Happens if APTC Goes Down?

If your total yearly premium tax credit amount goes down, you might have something called APTC exhaustion. APTC exhaustion can happen when your income goes up, and your yearly tax credit amount goes down.  Your yearly tax credit amount can also go down if there’s a change to your household size—like if you have a child who turns 26 and gets their own health insurance. If you take too many tax credits in advance, you may have to pay them back when you file taxes.

When your yearly tax credit amount goes down, Vermont Health Connect will change the amount of APTC you use each month, so you don’t take more than you have. 

Example of APTC exhaustion:

  • Jen has a health insurance plan with a $700 monthly premium. 
  • Jen has a yearly APTC amount of $6,000. Jen chooses to take all her premium tax credits in advance as APTC, so she gets $500 each month to lower her health insurance premium.
  • Jen uses $500 each month from January to June for a total of $3,000 over six months. She still has $3,000 of her yearly APTC amount left.
  • Jen gets a big raise in June, so her income goes up. She calls Vermont Health Connect and learns her yearly APTC amount went down to $4,800, because her income went up. This means she will get less APTC each month to lower her health insurance premium.
  • Jen already used $3,000, so she has $1,800 of her yearly APTC amount left. Vermont Health Connect divides Jen’s APTC amount by the number of months left in the year (six). 
  • Jen can use up to $300 per month in APTC from July through December. 

How Does APTC Affect Taxes?

When you file federal taxes, the IRS will look at your yearly income to find your final premium tax credit amount for the year. Then, the IRS looks at the premium tax credits you took in advance during the year:

  • If you were eligible for more premium tax credits than you took, you will get some back.
  • If you took more premium tax credits than you were eligible for, you must pay them back.

If you have questions about premium tax credits or how to report income changes, call the Customer Service Center at 1-855-899-9600 or speak with an in-person assister.