Do you qualify for Medical Tax Credit?

Covid-19 has brought medical care and it cost to the forefront. Rising premiums, increased co-pay, higher drug prices, and government mandates. Fortunately, the tax law provides you with some relief for the high cost of medical care by allowing you to treat your medical expenses in special tax advantaged. There is no longer any federal tax penalty for failing to have minimum essential health coverage, which had previously been required by the Affordable Care Act.

Employer-Provided Health Insurance

Employers with 50 or more full time equivalent employees are required to offer affordable health coverage for their staff and dependents or pay a penalty.

While employer-paid coverage for spouses is tax free, this treatment does not apply to domestic partners. Employees are taxed on employer-paid coverage for their domestic partners.

You do not have to report this tax-free fringe benefit. Even if your employer reports the value of the coverage on your W2 form, this does not change the tax-free treatment of the benefits to you.

Premium Tax Credit

If you do not have coverage through an employer, Medicare, Medicaid, or certain other program but think you may have trouble paying for private insurance, you may be eligible for a tax credit to help pay for coverage if you purchase it through a government health care exchange. The credit is refundable (it can exceed the amount of taxes owed) and can even be applied toward premiums throughout the year.

Advantage

If you have low or moderate income, you may qualify for the premium tax credit. It is an advanceable, refundable tax credit for eligible people who purchase coverage through a government health care exchange. The credit amount varies with household income for eligible taxpayers.

Requirements

• To qualify for credit, all of the following condition apply:

• You must obtain coverage through a government health care exchange.

• You must apply for the credit at the time you purchase your coverage by estimating household income.

• Your household income must fall within federal poverty guidelines.

• If your employer offers coverage and it is not affordable to you.

• You are not eligible for a government program.

• If you are married, you must file jointly, unless you are a domestic abuse victim and file separately.

• You are not someone else's dependent.

The federal government does not automatically give you the credit. You must prove eligibility for the credit, either at the time you purchase your health coverage from an exchange or when you file your return.