The IRS has released new guidance on the Premium Tax Credit (PTC), which helps eligible individuals and families afford health insurance through the Marketplace. Here are the key changes you should know:

🔹 No More Repayment Caps After 2025

If you receive advance payments of the PTC and your actual credit is less than what you received, you may owe money back. For tax years before 2026, repayment caps limited how much you had to repay based on income. Starting in 2026, these caps are removed—you’ll owe the full difference if you were overpaid.

🔹 Expanded Eligibility Through 2025

For tax years 2021–2025, the income limit of 400% of the federal poverty line has been temporarily lifted. That means even if your income exceeds this threshold, you may still qualify for the credit if you meet other eligibility criteria.

🔹 Clarity on Employer Coverage & Affordability

• If your employer offers affordable, minimum-value coverage, you generally cannot claim the PTC for Marketplace plans.
• New rules clarify how affordability is determined for family members (like spouses and dependents) when employer coverage is offered.
• Special exceptions apply for victims of domestic abuse or spousal abandonment, who may file as Married Filing Separately and still claim the credit.

🔹 What Counts as “Household Income”

Household income for PTC purposes includes modified adjusted gross income plus the income of family members required to file a tax return. Note: Income from Puerto Rico sources is generally excluded.

🔹 Important Filing Requirements

• If you receive advance PTC payments, you must file Form 8962 with your tax return to reconcile the amounts.
• Even if no advance payments were made, you can still claim the credit by filing Form 8962.
• Failure to file could affect your ability to receive advance payments in future years.

🔹 Changes During the Year Matter

If your income, family size, or life circumstances change (marriage, divorce, new job, etc.), update your Marketplace information promptly. This helps avoid large discrepancies between advance payments and your actual credit.

🔹 Special Rules for Medicaid/CHIP Enrollees

If the Marketplace determined you were ineligible for Medicaid/CHIP and you received PTC, but later became eligible for Medicaid, you may still claim the PTC for months you were enrolled in both—with some conditions.