A premium tax credit lowers what you pay each month for a marketplace plan. Most people take it in advance, in which case it goes straight to the insurer and you pay the reduced premium. That is why it is often called the advance premium tax credit, or APTC.
Because it is a tax credit paid in advance on an estimate, it is reconciled on your tax return. You estimate your income when you enrol; the following spring, the actual figure is compared against the estimate. Estimate low and you may owe some back. Estimate high and you get the difference as a refund.
That reconciliation is the mechanism people are most often surprised by, and the way to avoid the surprise is boring and effective: report income changes to the marketplace during the year rather than at tax time.
In New York: two changes have reshaped this and most published guidance has not caught up.
The enhanced credits expired December 31, 2025. The credit now runs on the pre-2021 formula, and the repayment cap that limited how much you could be asked to pay back is gone from the 2026 tax year. In practice that means both the credit and the downside risk of a bad estimate are larger than they were.
From January 1, 2027, eligibility narrows to lawful permanent residents, certain Cuban and Haitian entrants, and COFA citizens. What changes for 2027.
Also specific to New York: below 200% of the federal poverty level the relevant program is usually not a subsidised marketplace plan at all but the Essential Plan, which has a $0 premium, no deductible and no enrollment season. Comparing a subsidised bronze plan against the Essential Plan without knowing that is how people end up paying a deductible they did not need to have.
The credit is claimed on Form 8962 using Form 1095-A, which the marketplace sends. Keep it: filing without reconciling can block the credit the following year.
Also called: APTC, subsidy, advance premium tax credit. Full guide: The premium tax credit after the enhanced subsidies ended.
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This page explains how the system works. It is not medical advice. More.