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Wondering if you can get help paying for health insurance? Learn how tax credits work, who qualifies, and how to apply in this simple 2025 guide.
Introduction
Paying for health insurance can feel stressful, especially if you’re on a tight budget. Luckily, the government offers something called a tax credit to help people afford their monthly health insurance payments. But many people aren’t sure if they qualify—or how to find out. In this post, we’ll explain what a tax credit is, who can get it, and how to apply. We’ll keep it simple so you can feel confident and informed.
1. What Is a Health Insurance Tax Credit?
A health insurance tax credit helps lower the cost of your monthly premium (that’s the amount you pay every month for your plan). It’s also called a premium tax credit. This credit is available through the Health Insurance Marketplace and is designed to help people with low or middle incomes.
2. Who Qualifies for the Tax Credit?
To qualify, you must meet certain rules. You must buy your health insurance through the Marketplace and have an income between 100% and 400% of the federal poverty level (FPL). If your income is lower or higher, you might still get help, depending on your situation. Also, you cannot be eligible for affordable health insurance through your job or a government program like Medicaid or Medicare.
3. How Income Affects Your Eligibility
Your household income is one of the most important factors. The more you earn, the smaller your credit might be. The less you earn, the bigger your savings. For example, if you make around $30,000 a year, your monthly health insurance cost could be reduced by hundreds of dollars with a tax credit.
4. Family Size Matters Too
Tax credits are based on household size as well as income. A single person will qualify at a different level than a family of four. More people in your household usually means a higher income limit to qualify. That’s why it’s important to include everyone who files taxes with you, even if they’re not applying for insurance.
5. You Must File a Tax Return
To get and keep your tax credit, you must file a federal income tax return every year. If you don’t file, you could lose your credit in the future. You’ll also need to fill out a special tax form, IRS Form 8962, to show that you used the credit properly.
6. How to Apply for the Tax Credit
You don’t need a separate application. When you apply for a health plan on Healthcare.gov or your state’s Marketplace, the system will ask about your income and family. It will automatically show if you qualify for a tax credit and how much you could save each month.
7. Advance Payment or Tax Refund?
You can choose how to use your credit. Most people choose advance payments, which means the credit is used right away to lower your monthly bill. Or you can wait and take it all as a refund at tax time. Just be careful—if your income goes up during the year, you might have to pay some of the credit back.
8. What If Your Income Changes?
If you earn more or less than you expected, your credit amount may need to change too. Always update your income on the Marketplace so you don’t get too much or too little help. This helps you avoid surprises during tax season.
9. Special Help for Low-Income Individuals
If your income is very low, you might qualify for both a premium tax credit and cost-sharing reductions (CSRs). CSRs help lower your costs when you go to the doctor. You must choose a Silver-level plan to get both types of savings.
10. What Happens If You Don’t Qualify?
If you don’t qualify for a tax credit, you can still shop for plans through the Marketplace or consider other options like Medicaid (if your income is very low) or short-term insurance. Some states also offer their own assistance programs.
FAQs: Health Insurance Tax Credit
What is the income limit for a health insurance tax credit in 2025?
It depends on your household size. For one person, the limit is around $58,000, but it’s higher for larger families.
Can I still get a tax credit if I have a job?
Yes, but only if your job does not offer affordable health insurance. If your employer plan is too expensive or doesn’t offer good coverage, you may still qualify.
What happens if I get too much tax credit?
If your income was higher than you estimated, you may have to pay some of the credit back when you file your taxes. That’s why updating your info is important.
Do I have to pay the tax credit back?
Maybe. If your actual income is higher than expected, you might have to pay part or all of it back. If your income stays the same or drops, you probably won’t owe anything.
Can immigrants get a health insurance tax credit?
Yes, many lawfully present immigrants can qualify for the tax credit, depending on their income and immigration status.
Conclusion
Health insurance doesn’t have to be out of reach. The health insurance tax credit can make coverage much more affordable—sometimes even free. If you buy insurance through the Marketplace and meet the income and family size rules, you could qualify for big savings. Just make sure to apply honestly, report income changes, and file your taxes each year. It’s one of the easiest ways to get help paying for health care.
Ready to check if you qualify? Visit Healthcare.gov or your state’s Marketplace and start your application today.