Understanding how the Advanced Premium Tax Credit (APTC) is calculated can be crucial to getting affordable healthcare coverage. The APTC is a tax credit that can help reduce the cost of monthly premiums for health insurance plans purchased through Covered California.

The APTC is provided to those who qualify to help pay for health coverage. Your Advanced Premium Tax Credit is calculated based on your estimated annual household income, household size, and where you live.

When you apply for coverage through Covered California, you will estimate your income for the upcoming year. This estimate will be used to determine your eligibility for the APTC.

How can I calculate the Advanced Premium Tax Credit (APTC) accurately?

To qualify for the APTC, your Modified Adjusted Gross Income (MAGI) must be between 100% – 400% of the federal poverty level. The amount of APTC you receive is based on a sliding scale, meaning the lower your income, the higher percentage of your premium costs that APTC will cover.

Each year, the IRS establishes the percentage of income expected to contribute toward premiums. For 2024, individuals/families with incomes between 100% – 400% of the FPL will pay, at most, 8.5% of their Modified Adjusted Gross Income (MAGI) towards premiums.

The APTC is the difference between the cost of the second-lowest-cost silver plan (SLCSP) available to you and the maximum amount that you ought to pay toward your  health insurance premiums.

For instance, suppose the cost of the SLCSP is $500 per month, and you ought to pay 9% of your estimated income towards the premium. But your estimated income is only $20,000 per year. In that case, the APTC would be $2,880 per year. This amount is the difference between $500 per month and $1,800 per year (which is 9% of $20,000 per year).

How Does the APTC Affect My Taxes?

It’s important to remember that if you receive tax credits through Covered California, you’ll need to file taxes for that benefit year. You’ll receive a 1095-A form that shows how much Covered California paid to your insurance company. You’ll use this information to fill out IRS Form 8962. If you received too much financial help, you may owe some of it back. But, if you received less than you qualified for, you may owe less on your taxes or even qualify for a refund. Stay on top of your taxes and keep your financial situation in check!


APTC is a tax credit that can help make healthcare coverage more affordable. It’s based on your estimated income, Federal Poverty Level and the cost of the second-lowest-cost silver plan. If you have any questions about the APTC or your eligibility, don’t hesitate to consult with experts at Skyline Benefit.

Looking for Assistance with Covered California ?

Skyline Benefit is a certified insurance agency with Covered California. Act now and get the premium subsidy and coverage that you deserve.

Our agents can review your medical needs and budget, and tailor your health insurance options during Covered California Open Enrollment.

Call us now at (714) 888-5112

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