ACA Tax Credits

The ACA provided tax credits for self-employed people. Tax credits are available to anyone making 100% to 400% of the Federal Poverty Level (“FPL”), if you don’t have access to Medicaid or employer sponsored coverage (more info can be found here). For 2020, the upper limit for coverage eligibility is an annual income of $49,960 for an individual and $120,680 for a family of 5 (the limit is higher for Alaska and Hawaii which have their own FPL levels). 

Because this is such a high limit, it means tax credits are available for a lot of people. In fact, of the over 10 million people who had coverage through ACA exchanges in 2019, almost 90% of them qualified for some type of federal subsidy. The subsidies covered ~86% of the total healthcare premium! The most popular option is to have the subsidies paid directly to health insurers on a monthly basis, reducing the amount you have to pay. However, you can also pay the full premium amount yourself if you want and claim the full tax credit on your tax return.