The Premium Tax Credit is a subsidy that reduces the amount of a qualifying household’s premium for the purchase of an ACA exchange plan. Most PTCs are transmitted directly from the U.S. Treasury to an insurance company on an enrollee’s behalf. The amount of the PTC is calculated by subtracting the percentage of monthly household income expected to be paid for insurance from the premium amount of a benchmark plan. The percentage of monthly income to be paid for insurance is determined by the government according to a sliding scale where the lowest earners pay the lowest percentage of income for insurance.
The premium tax credit is also referenced by the acronym PTC.
Can a Premium Tax Credit be used for an off-exchange Obamacare plan?
No. Premium Tax Credits (PTCs) only apply to bronze, silver, gold, and platinum plans purchased on a government health insurance exchange. Off-exchange plans as well as catastrophic coverage plans on-exchange are ineligible for PTCs.
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