Pursuing a degree today definitely comes with its share of challenges, especially regarding finances. It feels like every step you take in college involves spending money—whether it’s tuition, books, or even the little everyday expenses that add up. This is why understanding premium tax credits for college students is a must.
With busy schedules and rising educational costs, many students skip out on healthcare insurance. Even the most basic plans can cost up to $500, which can be a huge burden when money is tight. It’s estimated that around 9% of college students don’t have health insurance.
Fortunately, there’s a way to ease the financial burden of healthcare through Premium Tax Credits for college students. PTCs, sometimes known as Advance Premium Tax Credits (APTCs), are a great resource for those who need help covering the cost of health insurance.
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PTCs were introduced as part of the Affordable Care Act. The ACA was signed into law on March 23rd, 2010 and became available when the Health Insurance Marketplace was launched in 2014. Today, about 20 million people in the U.S. use APTCs to make their health insurance more affordable, including many college students.
Premium Tax Credits for college students help lower the monthly cost of health plans bought through the Affordable Care Act (ACA) marketplace. Basically, the government helps pay part of your premium, so you don’t have to foot the entire bill. PTC credit is paid directly to your insurer, lowering your monthly premiums. You can apply it right away to reduce your premiums or wait to claim it as a refund when you file your taxes.
This can make a huge difference for students juggling tuition, textbooks, and rent. Low-income health insurance marketplace also includes things like:
- Emergency care
- Prescription drugs
- Lab tests and preventive services
- Outpatient services
- Hospitalization
- Maternity and newborn care
- Mental health and substance abuse treatment
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A few key things matter to qualify for the Premium Tax credits for college students, like your income, household size, and whether you have other coverage options.
Here’s a quick breakdown of how to qualify for premium tax credits:
Income
Your household income has to fall between 100% and 400% of the FPL based on your family size. These limits change each year, so it’s good to check the latest numbers from the government.
Citizenship or Legal Residency
You need to be a U.S. citizen or legally living in the U.S.
Employer Health Coverage
If your employer offers health insurance but the cost of covering your family is too high (more than a certain percentage of your household income), you might qualify for subsidized health insurance for low-income students. This is part of a fix to something called the “family glitch.”
No Other Coverage
To get the tax credit, you usually can’t be eligible for other health coverage, like through your employer, Medicare, or Medicaid.
Student-Specific Guidelines
Students face unique circumstances that can sometimes complicate their eligibility for Premium Tax Credits.
Here are a few factors to keep in mind:
- Dependency Status: If you’re claimed as a dependent on your parent’s tax return, your eligibility for tax credits may be based on their income, not yours. So, if your parents earn a higher income, you might not qualify for assistance, even if your personal income is low.
- Scholarships and Grants: Scholarships or grants don’t count as income for tax purposes, so that they won’t affect your eligibility. But, if you earn money through work-study or a part-time job, that income does count.
- Age: Your age may influence your options for certain health plans, but it doesn’t directly impact your eligibility for Premium Tax Credits.
Just remember, the rules regarding the college student health insurance subsidies can change over time. To ensure you have the most up-to-date details, check the official sources or talk to a tax professional.
PTCs are designed to provide affordable health insurance for students from low-income families. But what’s the actual definition of “low-income?”
Looking at your household income and comparing it to the federal poverty level (FPL) is key to understanding your eligibility for PTCs.
In the context of Premium Tax Credits, low income typically refers to those with an income between 100% and 400% of the FPL. The lower your income within this range, the higher your subsidy will likely be. To be more specific:
- 100% FPL is considered the absolute minimum income threshold for qualifying for PTCs.
- 400% FPL is the maximum threshold for receiving PTCs.
For example, if you’re a single student, the income limits for premium tax credits for 2024 are as follows:
- 100% FPL: $14,580 (This is the base level; if your income is lower, you likely won’t qualify for PTCs but may be eligible for Medicaid, depending on your state.)
- 150% FPL: $21,870
- 200% FPL: $29,160
- 250% FPL: $36,450
- 300% FPL: $43,740
- 400% FPL: $58,320 (PTC eligibility’s highest income level.)
If your income falls between these percentages of the FPL, you may be eligible for a Premium Tax Credit to reduce your monthly health insurance premiums.
It’s important to note that the Premium Tax Credit is designed to be progressive. So, someone with an income of $20,000 might get a larger credit than someone making $40,000, even though both are eligible for some assistance.
If your income is below 100% of the FPL, you will not be eligible for a Premium Tax Credit. However, this doesn’t mean you’re left without options. Many states have expanded Medicaid programs, providing health coverage at little to no cost for individuals below the federal poverty line.
States that have expanded Medicaid have set the income limit for eligibility at 138% of the FPL. Even if your income is below 100% of the FPL, you might still qualify for Medicaid. For a single person, this would mean an annual income of up to $20,120.
If you live in a state that has not expanded Medicaid, you may fall into the “coverage gap,” where you’re too poor to qualify for Premium Tax Credits but also too rich to qualify for Medicaid. This can be frustrating, but it’s worth checking with your state’s marketplace insurance for college students to see what specific programs are available in your area.
Step 1: Check if you’re eligible.
Before applying, you’ll want to see if you qualify for premium tax credits. Generally, you’ll be eligible if:
- You’re buying health insurance through the Marketplace (this includes state-based marketplaces).
- Your income is between 100% and 400% of the FPL. For a single student, this usually means earning up to around $54,000 a year (as of 2024).
- You lack access to affordable health insurance through an employer or any other government programs.
As a student, if you’re claimed as a dependent by your parents on their tax return, their income might affect your eligibility—even if you live alone. If you’re financially independent, you’ll apply based on your income.
Step 2: Gather your documents.
Now, it’s time to get your paperwork together. You’ll need a few key documents to apply for the credit. Here’s a quick breakdown of the two main forms:
Form 1095-A: Health Insurance Marketplace Statement
The Form 1095-A is sent to you by the Health Insurance Marketplace if you are enrolled in a plan through them. It usually arrives by January 31 and includes info like:
- Dates of coverage
- The amount of your monthly premium
- Any advance premium tax credits you received
You’ll use this form to fill out the next one, Form 8962. While you don’t need to file Form 1095-A with your taxes, keep it for your records. You may need it for your return or in case the IRS ever asks for it.
Form 8962: Premium Tax Credit (PTC)
Form 8962 is the form you use to reconcile the premium tax credits you qualify for with what you received in advance. It helps you figure out:
- Whether you received the right amount of premium tax credit
- If you owe any back payments or are due for extra credits
When filling out this form, you’ll need details like:
- Your household income
- The number of people in your household
- The premiums you paid
- The second-lowest-cost Silver plan premium in your area
Form 8962 is filed with your tax return (Form 1040). Make sure to fill it out correctly to avoid issues with the IRS.
Step 3: Create an account on the marketplace.
Head to the HealthCare.gov website (or your state’s Marketplace site if it has one) and create an account. You’ll enter some basic info like your name, address, and SSN. Once your account is set up, you’ll start your coverage application.
Step 4: Fill out the application.
You’ll be asked questions about your income, who’s in your household, and your student status. Don’t worry if it seems complicated—you can always reach out for help. Marketplace websites usually have a live chat, or you can call the support number if you need guidance.
Step 5: Review and submit.
Once you’ve filled everything out, double-check your information. Make sure your income and household details are correct, and submit your application. You’ll get a response telling you whether you qualify for premium tax credits or if you’re eligible for Medicaid or other coverage.
Don’t forget to keep an eye out for open enrollment for premium tax credits—it’s your chance to apply for help with lowering your health insurance premiums through the Health Insurance Marketplace.
Other Tips for Maximizing Health Insurance Savings
Here are several ways to save on insurance premiums beyond Premium Tax Credits. If you’re looking for more reduction or financial aid for student health insurance, consider these strategies:
- Special Enrollment Periods (SEPs): If you experience major life events like graduation, losing other coverage, or a change in household, you may qualify for an SEP to apply for health insurance outside the open enrollment period.
- Medicaid: If you earn below 138% of the FPL (or around $20,120 for a single person), you may qualify for Medicaid in expansion states, offering low- or no-cost coverage.
- Short-Term Health Plans: These can provide affordable premiums but limited coverage. They’re a good option for short gaps in coverage, but be mindful of what’s not included.
- Catastrophic Insurance: Ideal for young, healthy students, catastrophic plans feature low premiums and high deductibles, covering major medical emergencies rather than routine care.
- HSAs/FSAs: If enrolled in a high-deductible health plan, it’s best to open a Health Savings Account or Flexible Spending Account. The HSA and FSA helps you save pre-tax money for medical expenses.
- Cost-Sharing Reductions (CSRs): Those who qualify for a PTC may also qualify for CSRs. CSRs reduce out-of-pocket costs like deductibles, copayments, and coinsurance. These are only available with Silver plans purchased through the Health Insurance Marketplace.
- Telemedicine and Urgent Care: Use these services for minor health issues, as they are more affordable than in-person visits or emergency room care.
- State-Specific Programs: Some states offer additional subsidies or health insurance programs, even if you don’t qualify for federal credits.
Conclusion: Ensuring Affordable Health Insurance While in College
Premium Tax Credits (PTCs) help eligible college students reduce the cost of health insurance by lowering monthly premiums through the Affordable Care Act (ACA). If you’re a low-income student, PTCs can make healthcare more affordable by covering a portion of your premium costs. These credits can be applied immediately or claimed as a refund when filing taxes. If you qualify, this assistance can alleviate financial stress and provide essential health coverage.