State RegulationsTX specificDifficulty 3/5
Which of the following is required for an individual to receive the premium tax credit under ACA Section 1401?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
ACA Section 1401 conditions the premium tax credit on enrollment in a qualified health plan through the Marketplace and on the individual not being eligible for other minimum essential coverage, such as Medicare or affordable employer-sponsored coverage. Coverage bought outside the Marketplace and grandfathered plans do not generate the credit, and simply turning down employer coverage does not create eligibility. Practically, a Texas agent should screen for other coverage before telling a client that advance credit payments will be available.
Why the other options are wrong
- A) Grandfathered plans are not qualified health plans sold through the Marketplace for this purpose and do not support the credit.
- B) The credit is tied to Marketplace enrollment. A plan purchased outside the Marketplace does not qualify for advance credit payments.
- D) Declining employer coverage is not by itself enough. If the employer's coverage is affordable and provides minimum value, the employee is generally not eligible for the credit.
Memory hook
To get the credit: Marketplace plan, and no other minimum essential coverage.