D) $5,000

A) $1,000

Incorrect. Try again!

B) $3,000

Incorrect. Try again!

C) $4,000

Incorrect. Try again!

D) $5,000

Correct.

How the Premium Tax Credit Works:

Eligibility -

• Household income must be between 100% and 400% of the federal poverty level.

• Covered individuals must be enrolled in a "qualified health plan" through an Affordable Insurance Exchange.

• Covered individuals must be legally present in the United States and not incarcerated.

• Covered individuals must not be eligible for other qualifying coverage, such as Medicare, Medicaid, or affordable employer-sponsored coverage.

Credit Amount -

• The credit amount is generally equal to the difference between the premium for the "benchmark plan" and the taxpayer's "expected contribution."

• The expected contribution is a specified percentage of the taxpayer's household income. The percentage increases as income increases, from 2% of income for families at 100% of the federal poverty level (FPL) to 9.5% of income for families at 400% of FPL. (The actual amount a family pays for coverage will be less than the expected contribution if the family chooses a plan that is less expensive than the benchmark plan.)

• The benchmark plan is the second-lowest-cost plan that would cover the family at the "silver" level of coverage.

• The credit is capped at the premium for the plan the family chooses (so no one receives a credit that is larger than the amount they actually pay for their plan).