Will changing premiums impact the tax credits?

Yes. Because the calculation of the Advance Premium Tax Credit (APTC) is tied to premiums for the second-lowest silver plan available to a consumer, a change in the premium of that plan will impact the APTC. However, while the calculation is connected to that silver plan, consumers who qualify for an APTC can use the credit to shop for any bronze, silver, gold, or platinum plan available in their area through Connect for Health Colorado.

The tax credit amount is determined by subtracting the expected household contribution to medical premiums (based on household income) from the cost of the second-lowest silver plan (also called a benchmark cost) available. The expected contribution is determined on a sliding scale, established by the federal government.

Second-lowest silver premium – household contribution = tax credit amount

Example: Premium for second-lowest silver plan goes down from 2014 to 2015

  • Individual at 150% of the Federal Poverty Level (FPL)
  • 4% of household income expected as contribution to health insurance (for an individual at 150% of the FPL, a 4% contribution is required)
  • 2013 annual income of $17,235 (monthly: $1,436.25)
  • 2014 annual income of $17,505 (monthly: $1,458.75)

Calculation for APTC for 2014 (using FPL for 2013)

  • 4% of $1,436.25 = $57.45 (expected monthly household contribution)
  • Second-lowest silver plan premium = $400
  • $400 – $57.45 = $342.55

$342.55 was the amount of APTC for 2014 for this person

Calculation for APTC for 2015 (using FPL for 2014)

  • 4% of $1,458.75 = $58.35 (expected monthly household contribution)
  • Second-lowest silver plan premium = $300 (reduced from 2014)
  • $300 – $58.35 = $241.65

$241.65 is the amount of APTC for 2015 for this person

APTCs are only available if insurance is purchased through Connect for Health Colorado. Consumers can visit www.connectforhealthco.com or call 1-800-752-6749 for more information about tax credits.