Tax Credits

Last updated: March 30, 2016

What They Are and How They Work

Is There Help for People Who Can’t Afford Coverage? Who’s Eligible for Tax Credits?

The Affordable Care Act (ACA) created premium tax credits and cost-sharing reductions. These help cut costs for eligible people who buy a plan through the Health Insurance Marketplace.

The amount of the tax credit or cost sharing reduction depends on family size and income. Larger families and families with lower incomes get the most help.

  • Tax credits and cost-sharing reductions are not available for individuals who are eligible for Medicaid, CHIP, Medicare, or qualifying employer-sponsored coverage.

  • For information on tax credits and cost-sharing reductions see

In Kansas, children may be able to get coverage through Medicaid or CHIP programs for which their parents aren’t eligible.

  • Some families may find it more affordable to enroll their children in Medicaid or CHIP and have the parents buy coverage through the Marketplace.

Finally, because Kansas has not expanded Medicaid, some individuals may find themselves in a gap with income too high for Medicaid but too low to qualify for insurance subsidies.

How Do Tax Credits Buy Coverage Through the Health Insurance Marketplace Work?

People who qualify for the tax credits can use them at any time. They don’t have to wait until they file their taxes.

  • The federal government sends advance payment to your insurance company. This gets used to reduce the monthly insurance premium.

  • You can also wait to use your tax credits until you file your taxes. You can also use just part of your estimated tax credit in advance.

People Wanting To Use Their Tax Credit in Advance:

You must be as accurate as possible about how much income you expect to have in the coming year.

  • If you underestimate your income, the tax credit can be overestimated. If this happens, you may have to repay part of their tax credits at tax time.

Keep Your Information Up To Date

You must update the Health Insurance Marketplace during the year with any changes in:

  • Income

  • Family size (like having a baby)

  • Employment (like getting a job where health insurance coverage is offered)

The Health Insurance Marketplace will change the tax credit amount to reflect the new information.

  • Anyone who forgets to update the Health Insurance Marketplace might owe money at tax time.

  • You might also be able to use a larger tax credit amount in advance.

  • If you don’t use the tax credit in advance, you don’t have to tell the Health Insurance Marketplace about any changes to their income or employment during the year. They can get the tax credit on their tax returns.

You can go to the Health Insurance Marketplace website through, or call the Marketplace at 800-318-2596 for more information about tax credits. Insurance agents, navigators, and certified application counselors are also able to give consumers information about the tax credit.

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