The Advance Premium Tax Credit is a government subsidy for health insurance that was part of Obamacare, aka the Affordable Care Act, and was put in place in 2010. Under this provision, the government pays part of a person's health insurance bill by sending a check directly to the insurance company. It's called a "tax credit" (i.e. you get a rebate or a deduction, so you pay less tax), but in practice, it's a direct payment from the federal government to the insurance company.
The "advance" part comes in because the government is letting you take the tax credit right away, rather than forcing you to wait for all the tax filing rigmarole. Basically, the government loans you the money you expect to be credited based on your income, but the loan only works for buying health insurance. The catch is that, if you estimate your income wrong and end up getting less of a credit than you predicted, then you'll have to pay the difference when your taxes come around.
Why does the government take such pains to do this edge paperwork? Because too many people go bankrupt waiting for health insurance to pay them the dough owed. So rather than lean on the insurers, i.e. making it illegal for them to be opaque in what they charge and how they reimburse, the government just uses taxpayer dollars as a buffer. Fair? Not fair?
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Finance: Why Do Taxes Exist?137 Views
Why do taxes exist and notice we're saying that with a kind of a whiny tone
alright well someone has to pay for this and this and this and this yep there are [Hand pointing to a road, a school, a plane and a park]
a bunch of different types of taxes in each of them carries a different purpose
yeah Road taxes get paid in large part out of
the gasoline you buy you got to pay for the building and maintaining of potholes [Car drives into a pothole]
right and that makes sense if you drive a car you use the roads more so you
should pay more for its use that's like a use tax get it cleverly named if for [Price for federal tax per gallon and state tax per gallon]
when you own a home you'll pay real estate tax and for the most part that
tax is designated to pay schools all right well but like everything [Hand holding money from real estate tax to pay for schools]
government related nothing is simple in America the federal government has kind
of a matching program for schools where they pay for a portion of the education
cost based on various factors and you don't want us to get into that in the [complicated equation on chalkboard]
video all right well the largest taxes most people pay are income taxes and
those generally pay for the government to you know govern us if a couple made a
hundred grand jointly in California last year they'd pay around thirty [A couple stood together in their home]
thirty-five grand in taxes that money covers things like shiny new airplanes
to force the mean countries to play nice in the schoolyard it covers repairs to
crumbling bridges and tunnels across the country it covers public protective [Bridges crumbling]
services like police and fire department people
it covers libraries and public parks, well don't feel like you're getting your
money's worth these days if you're ever not feeling that you can always move to [Woman chased from a park by a tiger]
the Ukraine discounts on citizenship they're everywhere
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