2017 Obamacare Premium Tax Credit Calculator

Note: I’ve updated this calculator so that it runs directly on your browser (instead of on an embedded spreadsheet). To use this new and improved version, click here.

In 2017 the federal government will once again offer a Premium Tax Credit (PTC) to qualifying taxpayers who buy health coverage from an approved health insurance exchange.

To receive a PTC you must split the uprights between making too little and too much income. If you make too little, you drop out of Obamacare and into Medicaid. This precludes any PTC and subjects you to coverage that many believe is inferior to private health insurance. The PTC also disappears if you make too much. This happens when your household income exceeds 400% of the applicable poverty line (as discussed below, the government draws this line based upon your state of residence and household size).

To assist your Obamacare planning for 2017, I’ve updated this site’s popular PTC Calculator (for the 2016 version, click here). The calculator shows how much of your monthly premium will be reimbursed by the government and how much, if any, you’ll have pay yourself. To see your bottom line, you only have to enter four numbers:

Line 1: Your Monthly Premium. Plug in your monthly cost of health insurance for 2017. This is the premium you contract to pay during the open enrollment period that begins November 1, 2016 and ends January 31, 2017.

Line 2: The Monthly Premium of the Second Cheapest Silver Plan You’re Offered. Known as the Applicable Benchmark Plan (ABP), see Internal Revenue Code § 36B(b)(2), this amount can be obtained by ranking from cheapest to most expensive all the Silver plans that the health insurance exchange offered to you during the open enrollment period. The ABP is the second cheapest silver plan you were offered. You can also obtain the ABP by calling the marketplace from which you purchased your insurance. Your ABP can vary widely from year to year. For example, for 2014, our household’s ABP was $730.73, for 2015 it was $637.80, and for 2016 it was $886.85, and for 2017 it will be $1043.39.

Line 3: Your Household’s Poverty Line. For tax year 2017, use the 2016 Poverty Guidelines for the size of your household as reported in one of the three tables below. Use Table 1 if you live anywhere within the forty-eight contiguous states. Use Table 2 if you live in Alaska. Use Table 3 if you live in Hawaii.

Persons in family/household Poverty guideline
For families/households with more than 8 persons, add $4,160 for each additional person.
1 $11,880
2 $16,020
3 $20,160
4 $24,300
5 $28,440
6 $32,580
7 $36,730
8 $40,890

Persons in family/household Poverty guideline
For families/households with more than 8 persons, add $5,200 for each additional person.
1 $14,840
2 $20,020
3 $25,200
4 $30,380
5 $35,560
6 $40,740
7 $45,920
8 $51,120

Persons in family/household Poverty guideline
For families/households with more than 8 persons, add $4,780 for each additional person.
1 $13,670
2 $18,430
3 $23,190
4 $27,950
5 $32,710
6 $37,470
7 $42,230
8 $47,010

Line 4: Your Projected 2017 Modified Adjusted Gross Income (MAGI). For most taxpayers, there exists no difference between Adjusted Gross Income (AGI) and MAGI, because most households don’t experience any of the three narrow circumstances that trigger MAGI calculations: non-taxable social security benefits (see Form 1040, lines 20(a)-20(b)), tax-exempt interest (see Form 1040, line 8b), and excluded foreign earned income and housing expenses for those who live abroad (see Form 2555, lines 45 and 50). If your income stays level year-to-year, you can enter the AGI as reported on your most recent federal tax return (Form 1040, line 37). If your income fluctuates year-to-year, enter your low and high estimates for 2017 to see how they affect the results.

Here’s the calculator. If the bottom line (line 10) reports a negative value, this means that your PTC will exceed your monthly premium and your health insurance will be fully subsidized for 2017—a very good result indeed.

Note: values for the Applicable Percentage reported on line 7 are based upon the final version of Table 2 in the 2017 Form 8962 Instructions.

Tax Planning Notes

Choose the Best Plan. During open enrollment, run each of the plans you’re interested in buying through the calculator. Compare the results. Which plan has the lowest net premiums after backing out your projected PTC?

Qualify for Free Health Insurance.  On line 5 of the calculator, keep entering progressively higher amounts for MAGI until line 12 shows that the monthly cost of premiums is just above zero. Then reverse course. Keep cutting the MAGI number by a few dollars at a time until line 11 of the calculator reports a monthly premium tax credit that is just barely higher than the monthly premium reported on line 3. (It might take several attempts before the numbers come out right.) Using this basic approach, I’ve qualified for free health insurance every year since 2014. For details about my continuing quest for FREE health coverage, see my tax plan for 2017.

Avoid Medicaid. You can also use the PTC Calculator to avoid Medicaid coverage (if indeed this is something you wish to avoid). Medicaid eligibility is based upon your family’s Federal Poverty Line Percentage (FPLP) (see line 8 of the PTC Calculator). Whether you’re subject to Medicaid is a complex question because states apply differing FPLPs based upon existing pregnancies or the number of children in the household.

A fast starting point for analysis is the Medicaid eligibility chart published by the Centers for Medicare and Medicaid Services (CMMS) (click here). Several cautions apply to using this chart. First, it contains information current as of June 1, 2016. Rules change frequently so check for any updates at your home state’s Medicaid website. Second, Medicaid eligibility can vary based upon citizenship, residency, or immigration status. If any of your household members have issues in these areas, consult an expert. Third, most states disregard 5% of FPLP when calculating eligibility. So, for example, if the eligibility chart reports your household’s FPLP threshold as 133% for Medicaid, to be on the safe side boost your MAGI until you reach an FPLP of at least 138% (as reported on line 8 of the calculator).

One last note about avoiding Medicaid. As the CMMS eligibility chart reports, adult households subject to the nation’s highest FPLP thresholds for Medicaid are those located in: (1) the District of Columbia, where the FPLP threshold is 210%; (2) Minnesota, where the FPLP threshold is 200%; and (3) New York state, where the FPLP threshold is 200%. If you reside in any of these jurisdictions and prefer Obamacare to Medicaid, make sure that you exceed the elevated FPLP threshold. Consult with an expert who knows the local rules.

Defer or Accelerate Income. The calculator can tell you how much your PTC might change if you accelerate extra income into 2017 or, alternatively, defer receiving it until 2018. For example, if accumulated gains on stocks you now hold would push you over 400% of the Poverty Line (line 8), you might delay selling them until after January 1, 2018 (but of course this strategy exposes you to the risk of any intervening market downturns).

Defer or Accelerate Adjustments to Income. The PTC Calculator might also show that you could benefit by making adjustments to income in 2017, or, alternatively, by deferring them into 2018. Such adjustments include paying student loan installments early, funding Health Savings Accounts, accelerating 2018 tuition payments into 2017, and more. For a full list of possible adjustments, review lines 23 – 35 of Form 1040.

*  *  *

The tax code is a dense labyrinth filled with many traps for the unwary—and this is especially true when it comes to the complex rules that govern Obamacare. The PTC Calculator will point you in the right direction, but confirm what it tells you by consulting a competent tax advisor who knows your circumstances.

If you’d like to explore my prior articles about Obamacare, click the following:

Get Articles Via Email

Binge on the Frugal Fringe! Enter your email address to get future posts delivered to your inbox.

No comments yet.

Please Leave a Comment:

CommentLuv badge

DISCLAIMER. All information on this website appears on an "AS IS" basis. A Noonan Moose makes no representations to any reader as to the completeness, accuracy, or suitability of the information that appears on this website. A Noonan Moose specifically disclaims liability of any kind for any damage or loss that arises from any of the information published on this website or in the book Spend Less Now!