APTC and CSR Basics
June 2024
This information is intended only for the use of entities and individuals certifi ed to serve
as Navigators, certified application counselors, or non-Navigator assistance personnel in
a Federally-facilitated Marketplace. The terms “Federally-facilitated Marketplace” and
“FFM,” as used in this document, include FFMs where th e state performs plan
manage ment functions. Some in formation in this manual may also be of interest to
indiv iduals helping consumers in State-based Marketplaces and State-based
Marketplaces using the Federal Platform. This material was produced and disseminated
at U.S. tax filer expense.
CSG-202406
Agenda
I. What are advance payments of
the premium tax credit (APTC)?
II. Who is eligible?
III. APTC R
econciliation
IV. Cost-s
haring reductions (CSRs)
V. Case Scenarios
2
Brainstorming Question #1
What is the most challenging
issue you face when helping
consumers with APTC-related
issues?
3
What is APTC?
The Affordable Care Act (ACA) was enacted in March 2010. It provides for
eligible consumers to receive financial assistance to purchase a plan on the
Marketplace.
Financial assistance can come in the form of premium tax credits (PTCs) to lower
monthly insurance payments (called premiums) or CSRs that lower the amount
a consumer must pay for deductibles, copayments, and coinsurance.
Consumers can use advance payments of their PTC (APTC) to lower their
monthly insurance payments when they enroll in a plan through the
Marketplace. The consumer’s APTC is based on the estimated annual household
income and the household size that the consumer reports on their Marketplace
application. The consumer’s PTC is determined after the end of the year based
on the actual household income and household size for the year at tax filing.
4
What is APTC? (Cont.)
Depending on their actual household income for the
year, consumers may be required to repay excess
APTC received when filing their federal income tax
return.
5
Who is Eligible?
(Slide 1 of 3)
Under the ACA, a consumer is eligible to have APTC paid on their
behalf if they meet all of the following requirements:
Will have an annual household income that falls within 100 to 400
percent of the federal poverty level (FPL);
Note: The American Rescue Plan Act of 2021 (ARP) expanded eligibility for
PTC for the 2021 and 2022 plan years, and the Inflation Reduction Act (IRA)
extended this provision through the 2025 plan year. Under the IRA, APTC is
now also available through 2025 to consumers who otherwise meet
eligibility requirements and who have an expected household income
above 400 percent of the FPL.
6
Who is Eligible?
(Slide 2 of 3)
Under the ACA, a consumer is eligible to have APTC paid on their behalf if they
meet all of the following requirements (cont.):
Will not file a Married Filing Separately federal income tax return;
– Exception: A consumer may qualify for a special rule that allows certain victims
of domestic abuse and spousal abandonment to claim the PTC using the Married
Filing Separately filing status when they file their federal income tax returns.
These applicants should attest they are single when filling out an application.
Note: If a consumer is legally married but lives separately from their spouse for
at least six months of the year of coverage and for more than half of that year
lives with a tax dependent in a home that the consumer pays more than half of
the cost of, the consumer may be eligible to file their federal income tax return
as “Head of Household” and won’t have to miss out on eligibility for APTC and
PTC due to filing status.
7
Who is Eligible?
(Slide 3 of 3)
A taxpayer is eligible to have APTC paid on their behalf if they meet all of the following
requirements (cont.):
Must file a federal income tax return or be claimed as a tax filer’s dependent;
Must be enrolled in coverage (excluding Catastrophic coverage) through a Marketplace for
on
e or more months of the year; and
Is not eligible for or enrolled in other minimum essential coverage (MEC). For example:
– Is not offered “affordable” coverage through an eligible employer-sponsored plan that
provides minimum value or enrolled in employer-sponsored coverage (ESC) regardless of
affordability or provision of minimum value. An employer-sponsored plan is affordable if the
self-only premium is no more than 8.39 percent of annual household income in 2024. It
provides minimum value if the plan covers at least 60 percent of the total cost of medical
services for a standard population and includes substantial coverage of physician and
inpatient hospital services; and
– Is not eligible for qualifying coverage through a government program like Medicaid,
M
edicare, the Children’s Health Insurance Program (CHIP), or TRICARE.
8
Income Limits
In general, individuals and families may be eligible for APTC for their Marketplace coverage if
their household income for the year is at least 100 percent but no more than 400 percent of
the FPL for their household size.
Exception: If a consumer is a lawfully present immigrant and is determined ineligible for
Medicaid due to immigration status, they may be eligible for Marketplace coverage with
financial assistance, even though their household income may be below 100 percent of
the FPL.
The ARP expanded eligibility for PTC for Plan Years 2021 and 2022, which the IRA extended
for Plan Years 2023 through 2025. Under the ARP and IRA, APTC is now also available to
consumers with expected household income above 400 percent of the FPL.
9
Income Limits (Cont.)
For residents of one of the 48 contiguous states or Washington D.C., the
following illustrates when household income would be at least 100 percent
of the FPL for purposes of computing consumers’ APTC for 2024:
Household Size Household Income
at 100% of the FPL
One Individual $14,580
Family of Two $19,720
Family of Four $30,000
10
How Does the Consumer Qualify for
APTC?
When a consumer applies for Marketplace coverage,
the Marketplace will estimate the amount of PTC that
the consumer may be able to claim for the tax year
using information the consumer provides about the
consumer’s household size and projected household
income and the consumer’s/family members’ eligibility
for other, non-Marketplace coverage options described
earlier.
Based upon that estimate, the consumer can decide if
th
ey want to have all, some, or none of their estimated
PTC paid in advance as APTC directly to their insurance
company to lower their monthly premiums.
11
What Happens After a Consumer’s
Eligibility for APTC is Determined?
In general, if the consumer chooses to have APTC paid on their behalf to help with the
cost of Marketplace coverage, the consumer will be required to file a federal income tax
return for the year of coverage. IRS Form 8962 will also need to be filed with the federal
income tax return to reconcile the amount of APTC paid on their behalf with the PTC that
they may claim at tax filing based on their actual household income for the year and
household size at the end of the year.
If the consumer does not choose to use APTC or the Marketplace determines they were
n
ot eligible for APTC at the time of enrollment, they may still be eligible for the PTC when
they file their federal income tax return for the year. If so, the consumer must file IRS
Form 8962 to claim the PTC, which will lower the amount of taxes owed on that return or
increase their refund.
12
Job-based Coverage and Eligibility for
Financial Assistance in the Marketplace
If a consumer has an offer of employer-sponsored health coverage, they won’t
qualify for APTC or CSRs on a Marketplace plan if:
Their offer of employer-sponsored coverage meets the minimum value standard;
AND
Their offer of employer-s
ponsored coverage is considered affordable.
For 2024, a plan is considered “affordable” if the plan’s premiums do not exceed
8.39 percent of the employee’s household income.
13
Update to Calculating Employer-Sponsored
Coverage (Fixing the “Family Glitch”)
Before Plan Year 2023, an offer of employer-sponsored coverage was
considered affordable for all family members to whom an employer’s
offer extends if the premium for the employee’s self-only coverage was
affordable. The premium required to cover any family members was
not taken into account.
The Internal Revenue Service (IRS) issued new regulations that applied
s
tarting in Plan Year 2023. If a consumer has an offer of employer
coverage that extends to their family members, the affordability of
employer coverage for those family members will be based on the
family premium amount, not the self-only employee premium cost.
14
What It Means to “Reconcile”
If a consumer had a Marketplace plan and chose to have APTC paid to
their plan to lower the consumer’s monthly payment, the consumer
must “reconcile” when they file their federal taxes. This means they’ll
compare two figures:
The amount of APTC paid on behalf of the consumer or any other
member of the consumer’s tax family for the year of coverage. This was
paid directly to their health plan issuer to lower the consumer’s monthly
payment.
The PTC the consumer actually qualifies for based on the consumer’s
a
ctual household income, household size, and other items that determine
an individual’s PTC for the year.
Any difference between the two figures may affect a consumer’s
federal income tax refund or the amount of federal income tax owed.
15
Case Scenario #1: Maria and Jeff
Maria and her husband Jeff live in Michigan, have no dependents and were
making a combined $10,218 a month, which is 600 percent of the
applicable FPL. They’re enrolled in a Marketplace plan with $0 APTC.
Jeff loses his job as a bartender at a restaurant in March 2024 and their
ho
usehold income drops to $6,170 a month.
Should Jeff and Maria report the change to the Marketplace, and will they
become eligible for APTC? (Y/N)
16
Case Scenario #1 Answer
They should report the change in income to the Marketplace and may become eligible for
APTC as a result of this change. Prior to the passage of the ARP and IRA, despite the
reduction in household income, Jeff and Maria would not have been eligible for APTC.
However, for their 2024 coverage, Jeff and Maria could be eligible for APTC under the IRA
provision expanding APTC to consumers with household income above 400 percent of the
FPL through Plan Year 2025.
Jeff and Maria should come back to the Marketplace and resubmit their application to
ha
ve their updated APTC applied for future months. If Jeff or Maria qualifies for a Special
Enrollment Period (SEP), they may also choose to change plans. The increased APTC will be
applied prospectively when Jeff and Maria update their Marketplace application; however,
they may be able to receive additional premium tax credit when they file their federal
income tax return for 2024.
17
Factors That May Affect APTC
Received
The actual PTC for the year will differ from the APTC amount
estimated by the Marketplace if the consumers’ household size or
annual household income as estimated at the time of enrollment
is different from the household size or annual household income
they report on their federal income tax return.
The more their household size or annual household income differs
f
rom the Marketplace estimates used to compute their APTC, the
more significant the difference will be between their APTC and
their actual PTC. This is why it’s important to report changes to
household income and household size to the Marketplace
promptly.
For coverage years 2021 through 2025, the ARP and IRA adjust the
c
alculation of PTC to make Marketplace coverage more affordable.
18
Factors That May Affect APTC
Received (Cont.)
Other changes in circumstances, such as marriage or divorce, may
also affect the difference between APTC and the PTC.
If the actual PTC on their return is less than the APTC paid on their
behalf, the difference will be subtracted from their refund or
added to their balance due (subject to certain repayment caps).
If their actual PTC is more than their APTC paid on their behalf, the
difference will increase their refund or reduce their balance due.
19
Life Changes That May Affect APTC
When consumers notify the Marketplace about changes in circumstances as soon as they occur, it
allows the Marketplace to redetermine their eligibility for APTC and allows the consumer to adjust
the amount of APTC they apply to their premium.
This adjustment may decrease the likelihood of a significant difference between their APTC and their
a
ctual PTC. Changes in circumstances that can affect the amount of actual PTC include:
Increases or decreases in their household income (e.g., a lump sum payment of Social Security
b
enefits or taxable distributions from an individual retirement account or other retirement
arrangement, or different employment)
Marriage
Divorce
Birth or adoption of a child
Other changes to household composition
Gaining or losing eligibility for government-s
ponsored or employer-sponsored health care
coverage
Moving to another
address
20
APTC Reconciliation
Consumers who purchase coverage through the Marketplace should receive Form 1095-A,
Health Insurance Marketplace Statement, from the Marketplace by early February of the year
after the year of coverage. If this form shows that APTC was paid on behalf of a consumer or
a member of their family, the household’s tax filer is generally required to file a federal
income tax return for the year of coverage and complete IRS Form 8962
, Premium Tax Credit,
to “reconcile” those advance payments.
CMS will resume Failure to Reconcile (FTR) operations in Fall 2024 with the start of OE 2025,
a
nd, effective January 1, 2025, enrollees who have failed to file and reconcile for tax years
2022 and 2023 will no longer be eligible for APTC.
If a consumer with a two-t
ax year FTR status has in fact filed and reconciled but IRS data has
not yet updated, they can attest to filing and reconciling on their Marketplace application
during OE in order to remain eligible for APTC for PY 2025. The Marketplace will then recheck
the consumer’s attestation to see if they have in fact filed and reconciled during the FTR
Recheck process, which typically occurs sometime after OE ends annually on January 15.
21
Consequences of Not Reconciling
APTC
If consumers have questions about the information on Form 1095-A or about receiving
Form 1095-A, they should contact the Marketplace directly.
If APTC is paid on behalf of a consumer or another individual in the consumer’s tax
ho
usehold and the APTC is not reconciled on a completed Form 8962 with a federal
income tax return filed by the consumer (or someone else such as a tax filer who claims
the consumer as a dependent) for two consecutive years, the consumer will not be
eligible for APTC or income-based CSRs to help pay for their Marketplace coverage in
future years. This means that they will be responsible for the full cost of their monthly
premiums.
Form 1095-A provides information consumers will need when completing IRS Form 8962.
22
CSRs
CSRs are discounts that lower the amount a consumer has to pay for
deductibles, copayments, and coinsurance. If a consumer qualifies based on
their household income, they must enroll in a plan in the Silver category to get
these extra savings.
Typically, individuals and families with household incomes between 100 and 250
p
ercent of the FPL may be eligible to receive CSRs.
There are also non-i
ncome-based CSRs available to members of federally
recognized tribes.
23
Case Scenario #2: James
James has an offer of ESC. The plan he is offered covers 80 percent of his total
allowable health care costs and includes substantial coverage of physician and
inpatient hospital services.
James lives with his spouse but is the sole earner in his family, and his monthly
h
ousehold income is $4,038, which is $48,456 per year.
8.39 percent of James’s annual household income is $4,065 per year.
James’s cost for the lowest-p
riced plan his employer offers for self-only
coverage is $3,600 per year. However, the cost for the lowest-priced family
plan his employer offers to cover James and his spouse is $4,735 per year,
exceeding the affordability standard of 8.39 percent of James’s annual
household income.
James would like to decline his offer of ESC and purchase a plan for his family
t
hrough the Marketplace.
Is James eligible for APTC if he chooses to purchase a Marketplace plan? (Y/N)
24
Case Scenario #2 Answer
No, James is not eligible for APTC when purchasing a Marketplace plan. However,
APTC may be available for James’s spouse in the Marketplace, due to the family glitch
fix for coverage years beginning in 2024.
The ESC plan offered covers more than 60 percent of total allowable costs and includes
substantial coverage of physician and inpatient hospital services, which meets
minimum value.
James’s share of the lowest-pr
iced plan for self-only coverage ($3,600 per year) does
not exceed 8.39 percent of his annual household income ($4,065 per year). However,
the lowest-price family plan to cover James and his spouse does exceed this
affordability standard.
James can still decline his offer of ESC and instead choose to enroll himself and his
sp
ouse in Marketplace coverage. If he does so, APTC may be available for his spouse,
because the ESC family plan offered is unaffordable, but James would be ineligible for
APTC because of the affordable self-only premium amount, so his portion of the
Marketplace premium would be at full price.
25
Case Scenario #2: James (Cont.)
James’s hours have been reduced because his employer lost grant
funding.
Now, James’s household income decreases such that the cost of
self-only coverage is 12 percent of his annual household income.
Now that his household income has decreased, is James eligible for APTC if he
chooses to purchase a Marketplace plan? (Y/N)
26
Case Scenario #2 Answer (Cont.)
James may be eligible for financial assistance if he declines his ESC
offer, or ends his ESC enrollment, and enrolls in a Marketplace plan.
It’s important to tell consumers that they should return to the
M
arketplace if they experience a change in circumstances, like a
change in household income, as their options for coverage may
change.
27
Case Scenario #3: Alicia
Alicia’s household income is 300 percent of the
FPL. She has an offer of ESC.
Self-only coverage for Alicia would cost 8.25
percent of her annual household income.
The plan covers 58 percent of total allowable
costs.
Could Alicia be eligible for financial assistance if she
chooses to purchase a Marketplace plan? (Y/N)
28
Case Scenario #3 Answer
Yes, Alicia has an offer of ESC, and the plan meets the
affordability standard, but it only covers 58 percent of
total allowable costs. This does not meet the 60 percent
minimum value standard. Alicia would be eligible to
receive APTC if she chooses not to enroll in ESC and
instead purchases a Marketplace plan.
Remember: If Alicia is enrolled in ESC, she will be
ineligible for financial assistance through the
Marketplace, regardless of whether the plan is
affordable or meets minimum value standards.
29
Case Scenario #4: Jiang
Jiang has an offer of self-only ESC that costs 10
percent of his annual household income.
His plan covers 75 percent of total allowable
costs and includes substantial coverage of
physician and inpatient hospital services.
Could Jiang be eligible for financial assistance if he
chooses to purchase a Marketplace plan? (Y/N)
30
Case Scenario #4 Answer
Yes. In order to be an affordable offer of coverage, Jiang’s cost must not
exceed the maximum allowable percentage of his household income for
self-only coverage as well as cover the minimum required percentage of
total allowable costs and include substantial coverage of physician and
inpatient hospital services.
While 75 percent is above the minimum 60 percent threshold for total
allowable costs, 10 percent (Jiang’s cost for self-only ESC) is above the
maximum 8.39 percent of his annual household income, for which coverage
would be considered affordable for Jiang.
Consequently, his offer of coverage is not affordable, and he may be eligible
for APTC if he chooses to purchase a Marketplace plan.
31
Brainstorming Question #2
What is a best practice tip that you have found
to be effective when handling and resolving
APTC-related issues?
32
