“ARPA Ends the Dreaded “Subsidy Cliff”
Health-Insurance-Premium Tax Credit”
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With the passage of the American Rescue Plan Act of 2021, Congress gave the health-insurance-premium tax credit a rightful upgrade.
What did lawmakers do?
They removed the much criticized “subsidy cliff” for higher-income individuals during 2021 and 2022.
What is the subsidy cliff?
A little history… Until 2021, self-employed and small-business owners were required to pay up to 9.83% of their modified adjusted-gross-income for premium tax-credit coverage. And then the premium tax-credit coverage would pay for the rest.
Here’s what the problem was.
The premium tax credit was available only for enrollees whose modified adjusted gross income was 100% to 400% of the federal poverty level (FPL).
If your modified adjusted-gross-income was one dollar over 400% of the FPL (for a family your size), you got no tax credit. Not a penny. This means…
You
Fell
Over
The
Subsidy
Cliff
Here’s how Congress finally helped you.
Because Congress abolished the subsidy cliff, you’re now entitled to a premium tax-credit no matter how high your income is!
Of course, the devil is in the details and that’s where the Tax Reduction Letter comes in.
To understand everything in crystal-clear language…
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“ARPA Ends the Dreaded “Subsidy Cliff”
Health-Insurance-Premium Tax Credit”