The premium tax credit (PTC) is a refundable tax credit in the United States. It is payable by the Internal Revenue Service (IRS) to eligible households that have obtained healthcare insurance by a healthcare exchange (marketplace) in the tax year. It can be paid in advance directly to a healthcare insurance company to offset the cost of monthly health insurance premiums.
The tax credit is part of a host of Affordable Care Act tax provisions, introduced by the IRS in 2014,and is meant to extend health insurance coverage to 18 million lower and middle-income Americans.
The eligibility criteria for the premium tax credit is determined by section 1401 of the Affordable Care Act (Obamacare). The Act was signed into law on March 23, 2010 and specified the credits are only available to individuals and families who have enrolled in a health plan offered on a healthcare exchange. On May 23, 2012, the Internal Revenue Service (IRS) adopted a regulation that said tax credits would be made available to eligible individuals who enroll in a health plan through either a state or a federally facilitated exchange.The IRS based this on their interpretation of Section 1401.