Georgia Navigator Practice Exam

What permits an individual to apply a credit toward monthly health insurance premiums under the ACA?

1. Advance premium tax credit

2. Deductible tax credit

3. Health savings account

4. Employer contribution

The correct answer is: Advance premium tax credit

The advance premium tax credit enables individuals to reduce the amount they pay in monthly health insurance premiums under the Affordable Care Act (ACA). This tax credit is designed to make health insurance more affordable for low- to moderate-income individuals and families. When applying for health coverage through the Health Insurance Marketplace, applicants can report their income and household size to determine their eligibility for this credit. If eligible, the advance premium tax credit can substantially lower the cost of premiums, making it easier for individuals to access the necessary health coverage. The other options do not specifically provide a mechanism for reducing monthly premium payments in the same way that the advance premium tax credit does. Deductible tax credits relate to expenses that can be deducted from taxable income, health savings accounts are savings tools for qualified medical expenses, and employer contributions help with cost but are not individual credits applicable to monthly premiums. Thus, the advance premium tax credit is the mechanism by which monthly premiums are directly subsidized for eligible individuals.