Define "premium tax credit" in health insurance.

A premium tax credit is designed to assist low-income individuals and families in making health insurance more affordable by reducing the amount they need to pay in premiums. This financial assistance is available to those who purchase insurance through the Health Insurance Marketplace and whose income falls between 100% and 400% of the federal poverty level. By lowering the premium costs, the credit aims to increase accessibility to health insurance, thus making it easier for individuals to obtain coverage and maintain continuity in their health care needs.

The other options do not align with the definition of a premium tax credit. There are no discounts related to hospital services, and the premium tax credit is not a penalty for exceeding income limits. Additionally, it is not a refund for medical expenses, as it specifically relates to the subsidies available for purchasing health insurance coverage rather than reimbursements for healthcare costs incurred.