6 tax tips for new taxpayers
Girl Scout cookies might be tax deductible

Obamacare tax credit upheld by court. How much can you get?

This post was updated Nov. 9, 2018

I live in Texas, a state that does not offer a health insurance exchange. Instead, we Lone Star Staters must use the federal exchange to buy their medical coverage.

It has not been an easy time for my neighbors in need of health care, given HealthCare.gov's shaky roll-out. But being hardy Texans, they forged on and ended up getting policies to their liking.

And now, a federal judge has determined that they will be able to claim, if eligible, the Premium Tax Credit on their 2014 federal return.

Tax help in buying medical coverage: The Premium Tax Credit was created to help make purchasing health insurance coverage more affordable for people with moderate incomes.

A group that opposes the Affordable Care Act, or Obamacare as it's popularly known, filed a lawsuit challenging the availability of the credit for folks who buy their coverage through the federal marketplace instead of state exchanges.

Individual Insurance Marketplace and Medicaid Expansion
by State as of Dec. 11, 2013

They contended that the Premium Tax Credit was created as an incentive to get states to establish and run marketplaces for Obamacare-mandated insurance coverage. As such, argued the plaintiffs in Halbig v. Sebelius, the credit should not be available to those who buy insurance via the federal marketplace.

The lead plaintiff in the federal suit against Health and Human Services (HHS) Secretary Kathleen Sebelius was Virginia resident Jacqueline Halbig. She was joined in the complaint by individuals and employers from states where insurance marketplaces are operated by the federal government.

But as I noted last week at my other tax blog, D.C. District Court Judge Paul Friedman rejected Halbig et al's argument. Friedman affirmed in his 39-page ruling that Congress intended to provide the tax credit to insurance buyers at any exchange, state or federal.

Who's Obamacare tax credit-worthy? HHS data indicate that nearly 80 percent of the approximately 2.2 million who have signed up for health coverage via all the marketplaces qualify for subsidies.

The Internal Revenue Service has an online tool to help you determine if you qualify for the premium tax credit.

For 2019, the maximum tax credit is available to individuals with annual incomes of up to $48,560; to four-person families earning up to $100,400; and to large families of eight or more with incomes of up to $169,520.

When you buy coverage on an exchange, your tax credit amount will be estimated and you can choose to have that amount advanced, in full or part, to the insurance company you selected.

When you file your tax return next year, you subtract any credit you had paid in advance when you make the claim for the remainder. If you didn't get an advance credit, you claim the full credit amount on your return.

Obamacare credit calculators: So just how much of a tax credit might you as an Obamacare marketplace insurance buyer get?

Obviously, myriad personal permutations involving the millions of newly insured will determine the precise amounts for each filer.

Today's Daily Tax Tip, however, can help you get an idea. Here are some online tools that will give you a guesstimate of your possible Obamacare Premium Tax Credit.

The Kaiser Family Foundation has created a health care tax credit calculator. HealthInsurance.org has a health care subsidy calculator, too.

Some tax software providers also offer their own calculators, as does the National Taxpayer Advocate's website.

Here's hoping you find an insurance policy that fits your needs and that, with tax help, hat it's more affordable.

Bankrate Taxes Blog iconMore tax blog talk: In addition to the health care tax credit court decision over at Bankrate Taxes Blog, I also looked last week at Japan's decision to tax downloads from foreign countries.

If you miss my additional tax thoughts over at that personal financial website tax blog, usually on Tuesdays and Thursdays, you can always find a synopsis here on the ol' blog the following weekend.

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