Health insurance question

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cppoly
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Health insurance question

Post by cppoly »

I got married mid year and my wife doesn't pay any money for health insurance under the affordable care act since she's under the income threshold level. Now that we're married, can we maintain this arrangement if we file our taxes separately? Or, once we're married we do not have that option to to maintain free health care for her regardless if we our taxes separately (filing jointly would put us over the income threshold level)? I currently receive health insurance through my employer.
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dodecahedron
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Re: Health insurance question

Post by dodecahedron »

No. A Married-Filing-Separately filer will not be eligible for premium tax credit subsidies, no matter how low her income. There are a few very narrow exceptions for domestic abuse or situations where one spouse lives separately with one or more qualifying children, but a normal happily married couple living together can't claim the premium tax credit unless they file a joint return.

https://www.irs.gov/instructions/i8962/ch01.html#d0e215
Last edited by dodecahedron on Wed Jul 27, 2016 1:07 pm, edited 1 time in total.
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HueyLD
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Re: Health insurance question

Post by HueyLD »

No, she cannot continue to receive the subsidy if she files as MFS. The only exception is for her to prove that you beat her up and she fears for her life.
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dm200
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Re: Health insurance question

Post by dm200 »

cppoly wrote:I got married mid year and my wife doesn't pay any money for health insurance under the affordable care act since she's under the income threshold level. Now that we're married, can we maintain this arrangement if we file our taxes separately? Or, once we're married we do not have that option to to maintain free health care for her regardless if we our taxes separately (filing jointly would put us over the income threshold level)? I currently receive health insurance through my employer.
It probabably would make the most sense to add her (as a spouse) on your employer insurance right away.
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dodecahedron
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Re: Health insurance question

Post by dodecahedron »

Not only will her "free health care" end once she notifies the exchange of her marriage, when an MFS tax return is filed next spring for 2016, she would need to pay back the subsidies she has already received for months prior to her marriage going back to Jan 2016.
IRS instructions for Premium Tax Credit (Form 8962) wrote:Married filing separately.

If you file as married filing separately and are not a victim of domestic abuse or spousal abandonment (see Exception 2—Victim of domestic abuse or spousal abandonment under Married taxpayers above), then you are not an applicable taxpayer and you cannot take the PTC. You generally must repay all of the APTC paid for a qualified health plan that covered only individuals in your tax family. If the policy also covered at least one individual in your spouse’s tax family, you generally must repay half of the APTC paid for the policy. See the instructions for line 9, later. However, the amount of APTC you have to repay may be limited.
https://www.irs.gov/instructions/i8962/

If you file a joint return and your 2016 combined MAGI is above 400% of poverty level for a household with two people (around $62,000), you can also expect that subsidies will need to be repaid.
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dodecahedron
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Re: Health insurance question

Post by dodecahedron »

dm200 wrote:
It probabably would make the most sense to add her (as a spouse) on your employer insurance right away.
I agree with this recommendation. Also, she is supposed to notify the exchange of her marriage, regardless.
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cppoly
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Re: Health insurance question

Post by cppoly »

Ok thanks. So it has no benefit to file separately in this regard. Might as well file jointly.

If we file jointly, she will have to return all of the subsidies as well?

So it's probably a good idea to get her off the ACA as soon as possible??
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dodecahedron
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Re: Health insurance question

Post by dodecahedron »

cppoly wrote:

If we file jointly, she will have to return all of the subsidies as well?
If your combined MAGI is over 400% of poverty level for household of two, yes, she will need to return all subsidies received.

(There are limits on the amount of repayment required if your income is below 400% poverty, but once you cross the line, the full amount of the subsidies must be repaid.)

Edited to add: if you will be itemizing deductions, the amount of tax credits repaid on the tax return you file next spring can be included as a deductible medical expense on Schedule A (but, like all such expenses, it is subject to a 10% of AGI threshold, assuming you are both under 65.)
Last edited by dodecahedron on Wed Jul 27, 2016 1:46 pm, edited 1 time in total.
Rupert
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Re: Health insurance question

Post by Rupert »

Just fyi: There are only a few circumstances where it makes sense for married people to file separately. You'll usually pay more taxes filing separately. This link to Turbotax summarizes it pretty well: https://ttlc.intuit.com/questions/18944 ... separately
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dm200
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Re: Health insurance question

Post by dm200 »

cppoly wrote:Ok thanks. So it has no benefit to file separately in this regard. Might as well file jointly.
If we file jointly, she will have to return all of the subsidies as well?
So it's probably a good idea to get her off the ACA as soon as possible??
Yes. From my wife's experience moving from coverage under the ACA (with subsidy) to Medicare (when eligible at age 65) and keeping the same provider (Kaiser), it was a bit of a bureaucratic mess for her to be reomved from the ACA coverage or list. She kept calling once or twice a month for several months. There seem to be some difficulties in this process.
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Flobes
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Re: Health insurance question

Post by Flobes »

Read IRS Publication 974.

Look for section titled, "Alternative Calculation for Year of Marriage." Use Worksheet V.
If you are eligible, electing the alternative calculation may reduce the amount of APTC you have to repay. Electing the alternative calculation is optional...
[APTC= Advanced Premium Tax Credit = subsidy.]
Topic Author
cppoly
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Re: Health insurance question

Post by cppoly »

Just curious, how do I find out how much we have to owe back in free health care if it was 6 months worth? Assuming all of it will have to be given back.
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Flobes
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Re: Health insurance question

Post by Flobes »

cppoly wrote:Just curious, how do I find out how much we have to owe back in free health care if it was 6 months worth? Assuming all of it will have to be given back.
She can log into her account.

You do not "owe back in free health care."

If your wife received subsidy for her monthly premiums, it's an advance tax credit to which she is no longer entitled, so all may need to be paid back. If she received cost-sharing benefits, there is no payback.
Intens
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Re: Health insurance question

Post by Intens »

Flobes wrote:
cppoly wrote:Just curious, how do I find out how much we have to owe back in free health care if it was 6 months worth? Assuming all of it will have to be given back.
She can log into her account.

You do not "owe back in free health care."

If your wife received subsidy for her monthly premiums, it's an advance tax credit to which she is no longer entitled, so all may need to be paid back. If she received cost-sharing benefits, there is no payback.

The cost-sharing benefits generally is the lower copayments on doctor office visits and presciptions.
For mine, the difference of a visit to a specialist office was $20 for one income and $50 for another income.
I have encountered both because of my fluctuating income as a result of the uncertainty of working contract.
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