Your Guide to the ACA Marketplace: How Advanced Premium Tax Credits Work
Getting health insurance outside of employment and Medicare can be a complex (and often expensive) endeavor for many Americans. The Affordable Care Act (ACA) Marketplace—also known as the Health Insurance Marketplace—was established to address this problem. Today, ACA coverage is a popular choice for people who retire before 65, are self-employed, between jobs, or have a job that doesn’t offer employer-sponsored health insurance.
If you’re a financial advisor and you’re reading this, you might think to yourself, “Yeah, but my client makes too much money to qualify for ACA coverage.”
That’s where you’d be mistaken! Income does not determine eligibility for ACA coverage. Anyone who is a U.S. citizen and doesn’t qualify for other healthcare coverage options can enroll in ACA coverage. What is determined by income is the availability (and amount) of Advanced Premium Tax Credits for your client.
What’s an Advanced Premium Tax Credit?
Through the ACA Marketplace, also referred to as the Exchange, individuals and families can apply for health insurance at more affordable rates thanks to Advanced Premium Tax Credits.
According to the IRS, the amount of the credit your client could receive is “Generally equal to the premium for the second lowest cost silver plan available through the Marketplace that applies to the members of your coverage family, minus a certain percentage of your household income.”
The lower your client’s modified adjusted gross income, the larger the tax credit they’ll receive to help pay for health insurance coverage.
For example, if your client qualifies for a $250 tax credit and is interested in an ACA plan with a $450 monthly premium, they can opt to take the full credit offered and pay only $200 in monthly premiums for the year. The alternative to using a tax credit monthly is to instead receive the entire tax credit benefit in full when your client files their tax return for the year.
It’s important to note that if your client enrolls in a plan with a premium that’s less than their Advanced Premium Tax Credit, they might have to pay money back when they file their federal income tax return. This is called “reconciling” the payments of the Advanced Premium Tax Credit and the actual Advanced Premium Tax Credit they qualified for based on their final income for the year.
Important update for 2025:
Because of the One Big Beautiful Bill Act, the enhanced Advanced Premium Tax Credits (APTCs) that were introduced during COVID under the American Rescue Plan and later extended by the Inflation Reduction Act are set to expire on December 31, 2025.
These enhanced credits temporarily expanded eligibility for ACA Advanced Premium Tax Credits beyond the traditional income cap, allowing households with incomes above 400% of the Federal Poverty Level (FPL) to qualify for tax credits if their premiums exceeded a certain percentage of their income. This expansion was especially helpful for early retirees and higher-income households who would not have qualified under the pre-2020 rules.
Starting in 2026, Advanced Premium Tax Credit eligibility will revert to how it worked before the COVID relief acts. That means clients with incomes above 400% of the FPL will no longer qualify for tax credits to reduce ACA premiums. This does not mean Advanced Premium Tax Credits are going away. They will still be available for households up to 400% of the FPL, just as they were prior to 2020.
If you’d like to learn more about the One Big Beautiful Bill Act and its impact on healthcare costs and coverage, check out our on-demand webinar!
How to help clients apply for Advanced Premium Tax Credits
First, take a look at the chart above again. You’ll notice that even a couple who makes just under $85,000 a year can qualify for an Advanced Premium Tax Credit. Did several clients just pop into your mind who could actually get affordable health insurance on the ACA Marketplace? We hope so!
It’s important to note that many of the income management strategies you might already utilize to lower clients’ taxable income can also be used to help clients qualify for greater Advanced Premium Tax Credit amounts. And with 1.5 million on ACA coverage in 2024 with an income above 400% of the Federal Poverty Level, it’s going to be more important than ever to:
Manage clients’ income so they still qualify for ACA Advanced Premium Tax Credits.
Now, let’s get into how to actually apply for an Advanced Premium Tax Credit. Be forewarned, it’s a bit of an arduous process, which is why we recommend partnering with a healthcare planning partner like Move Health to take the heavy lifting off of you and your clients!
Your client will need to enter their income, how many people are in their household, and the state they live in at Healthcare.gov to see if they’re eligible. If they do qualify, there are four steps to apply and enroll for coverage through the ACA.
People in most states will enroll for individual/family or small business coverage through HealthCare.gov, but some states, such as California, New York, and Colorado, have developed their own State-Based Marketplaces to manage enrollment. You can look for your state here to know where to begin this process.
1. Create an ACA Marketplace account
To start an account, you’ll need to enter basic personal information, including your name, physical address, and email address. You will be prompted to select a username and password so that you can log in to your account in the future.
2. Gather information
The ACA Marketplace website provides a list of information and documents that you’ll need on hand to complete your application. Information for every member of your household will need to be submitted, including individuals who already have a health plan through another source and are not seeking coverage.
3. Get your eligibility results
Based on the information you provide, you will get instant eligibility results. At this point, you’ll be able to see if you qualify for a discounted health plan through the ACA Marketplace and the amount of the Advanced Premium Tax Credit you’ll receive. During this step, you’ll also be able to see if you qualify for free Medicaid coverage or the Children’s Health Insurance Program.
4. Enroll in a health plan
At this stage in the process, you’ll get a list of coverage options to compare. These options will typically span several insurance providers, and premiums will vary based on the specifics of each plan. Copays, deductibles, coinsurance, and out-of-pocket maximums all impact the cost of a plan. Once you choose the plan that best suits your needs, you can complete your enrollment.
Choosing the right plan is the most important (and often, the most complex) part of enrolling in ACA coverage. That’s why so many financial advisors and their clients are grateful for Move Health’s healthcare planning software and team of licensed agents—our process ensures that advisors and their clients feel confident that they’re choosing the right healthcare plan for their health needs, preferences, and financial goals.
Moving Forward
There are two main takeaways we want you to keep in mind after reading this blog:
1. Your client who wants to retire before 65, is between jobs, or wants to start their own business, more than likely qualifies for ACA coverage, and with the right strategies, can even qualify for Advanced Premium Tax Credits.
2. At Move Health, we work with comprehensive financial advisors to help their clients engage in healthcare planning as an important part of their overall financial plan. When you join Move Health, you gain access to our award-winning healthcare planning software and team of licensed agents to create a personalized healthcare planning experience for clients that takes them all the way from initial analysis to enrollment.
