ARPA Provides Premium Tax Credit Enhancements for 2021 and 2022, Apr. 1, 2021

The ARPA expanded the premium tax credit rules to provide a more generous ACA benefit for 2021 and 2022. Under the normal rules, the premium tax credit is available to taxpayers with household income between 100 percent and 400 percent of the federal poverty line. ARPA generally eliminates the upper income limit and increases the amount of the premium tax credit because it decreases the percentage of household income that individuals are required to contribute to their health insurance coverage. Under the new law, the percentage rates will range from zero to 8.5 percent of household income (down from between 2.07 percent and 9.83 percent in 2021 under prior law) regardless of how much a family earns. In other words, even taxpayers with household income that exceeds 400 percent of the federal poverty line will be eligible for a credit if their cost of coverage exceeds 8.5 percent of income. For more information on the premium tax credit, see Q 8849.