	Background

Certain individuals and families without access to subsidized health insurance coverage may be eligible for premium tax credits. These premium credits, authorized under the Patient Protection and Affordable Care Act (ACA; P.L. 111-148 , as amended), apply toward the cost of purchasing specific types of health plans offered by private health insurance companies. Individuals who receive premium credits also may be eligible for subsidies that reduce cost-sharing expenses. Exchanges operate in every state and the District of Columbia (DC). Premium Tax Credits

The dollar amount of the premium tax credit is based on a statutory formula and varies from individual to individual. Individuals who are eligible for the premium credits generally are required to contribute some amount toward the purchase of their health insurance. The premium credit is refundable, so individuals may claim the full credit amount when filing their taxes, even if they have little or no federal income tax liability. The credit also is advanceable, so individuals may choose to receive the credit in advance of filing taxes on a monthly basis to coincide with the payment of insurance premiums (technically, advance payments go directly to insurers). Eligibility

In order to be eligible to receive premium tax credits, individuals must meet the following criteria: 
file federal income tax returns; enroll in a plan through an individual exchange; have annual household income at or above 100% of the federal poverty level (FPL) but not more than 400% FPL; and not be eligible for minimum essential coverage (see " Not Eligible for Minimum Essential Coverage " section in this report), with exceptions. Individuals who are eligible for cost-sharing assistance may receive both types of subsidies, as long as they meet the applicable eligibility requirements. The ACA requires the HHS Secretary to provide full reimbursements to insurers that provide cost-sharing subsidies. One type of cost-sharing assistance reduces such limits (see Table 5 ).
Certain individuals without access to subsidized health insurance coverage may be eligible for premium tax credits, as established under the Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended). The dollar amount of the premium credit varies from individual to individual, based on a formula specified in statute. Individuals who are eligible for the premium credit, however, generally are still required to contribute some amount toward the purchase of health insurance.
In order to be eligible to receive premium tax credits, individuals must have annual household income at or above 100% of the federal poverty level (FPL) but not more than 400% FPL; not be eligible for certain types of health insurance coverage, with exceptions; file federal income tax returns; and enroll in a plan through an individual exchange. Exchanges are not insurance companies; rather, exchanges serve as marketplaces for the purchase of health insurance. They operate in every state and the District of Columbia (DC).
The premium credit is refundable, so individuals may claim the full credit amount when filing their taxes, even if they have little or no federal income tax liability. The credit also is advanceable, so individuals may choose to receive the credit on a monthly basis to coincide with the payment of insurance premiums. The ACA premium credit is financed through permanent appropriations authorized under the federal tax code.
Individuals who receive premium credits also may be eligible for subsidies that reduce cost-sharing expenses. The ACA established two types of cost-sharing subsidies (or cost-sharing reductions). One type of subsidy reduces annual cost-sharing limits; the other directly reduces cost-sharing requirements (e.g., lowers a deductible). Individuals who are eligible for cost-sharing reductions may receive both types. Although applicable health plans must provide these cost-sharing reductions, such plans are no longer receiving payments to reimburse them for the cost of providing the subsidies.