The Internal Revenue Service (IRS) on Wednesday, May 23, is expected to publish in the Federal Register final regulations regarding health insurance tax credits under the Patient Protection and Affordable Care Act (PPACA) of 2010.
The Congressional Budget Office (CBO) estimates that the average tax credit, available to individuals and families who fall within 100 percent and 400 percent of the federal poverty level ($22,350 to $89,400 a year in 2011 dollars for a family of four), will be $5,000.
The tax credit will be available year-round rather than at tax-filing time, so that participants' income after taxes can be higher to help cover the cost of health insurance, which PPACA mandates that every person must carry beginning Jan. 1, 2014.
The tax credits apply only to individuals and families who are purchasing personal policies or participating in small group policies, and the policies must be purchased through PPACA-mandated state health insurance exchanges (which will operate largely online) to be eligible.
Under the IRS vision, the amount of the tax credit can rise above the amount of income taxes owed, but it cannot exceed the cost of the health insurance premium.