ACA subsidy payback- married Dec 2017

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Lrt12
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ACA subsidy payback- married Dec 2017

Post by Lrt12 » Fri Mar 23, 2018 1:32 pm

DH and I got married in December 2017. Prior to us getting married, he was receiving health care through ACA. His healthcare was subsidized as he was interning with a part time job. Since we got married and are considered married the whole year for tax purposes, we are being asked to pay back the ~$4,000 subsidy he received. We did not live together prior to marriage and our finances were completely separate. Are we just out of luck and should have planned our wedding a month later? DH's long-time childhood neighbor is a CPA and is looking into it for us. I just wanted to see if anyone on this forum has dealt with this. Thanks!

theluckyone
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Re: ACA subsidy payback- married Dec 2017

Post by theluckyone » Fri Mar 23, 2018 2:15 pm

The ACA program doesn't care that your finances are separate. They look at the joint income of a couple. So, getting married in December meant that your combined income went over the subsidy limit and your spouse isn't eligible for the subsidy. I'm not aware of anything you can do about the situation. Many people are getting caught in a similar situation.

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munemaker
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Re: ACA subsidy payback- married Dec 2017

Post by munemaker » Fri Mar 23, 2018 2:25 pm

There is not anything you can do about this.

madbrain
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Re: ACA subsidy payback- married Dec 2017

Post by madbrain » Fri Mar 23, 2018 3:27 pm

Not that I would advise doing this, but from what I understood in the past, there was no enforcement for repayment of subsidies. If you are owed a refund, then that will be nullified, but if you owe money solely because of the subsidy repayment, then you may be able to get away without paying. But IANAL nor a CPA. If we are talking about repaying a subsidy of $10K+, though, it may be worth talking to one.

DetroitRick
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Re: ACA subsidy payback- married Dec 2017

Post by DetroitRick » Fri Mar 23, 2018 3:57 pm

One idea - If either or both of you qualify for a deductible IRA contribution, doing so up to the limit might help. Deductibility will depend on age and tax situation. But deductible IRA contributions do lower MAGI (modified adjusted gross income) for ACA subsidies. The question will be whether this would be enough of a decrease to help you. Deadline is April 17, 2018. Just make sure, if you do so, that the trustee records as a 2017 contribution. Irrespective of this hiccup, congrats on getting married :sharebeer

missingdonut
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Re: ACA subsidy payback- married Dec 2017

Post by missingdonut » Fri Mar 23, 2018 3:59 pm

Is Part V of Form 8962 filled in?

Topic Author
Lrt12
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Re: ACA subsidy payback- married Dec 2017

Post by Lrt12 » Fri Mar 23, 2018 7:23 pm

DetroitRick wrote:
Fri Mar 23, 2018 3:57 pm
One idea - If either or both of you qualify for a deductible IRA contribution, doing so up to the limit might help. Deductibility will depend on age and tax situation. But deductible IRA contributions do lower MAGI (modified adjusted gross income) for ACA subsidies. The question will be whether this would be enough of a decrease to help you. Deadline is April 17, 2018. Just make sure, if you do so, that the trustee records as a 2017 contribution. Irrespective of this hiccup, congrats on getting married :sharebeer
With my income we won’t be able to get our MAGI low enough to be eligible for subsidies. We both have contributed to max out Roth IRAs via the back door for 2017. Thanks for the congrats! Even if we are out on the money, I still have a wonderful DH who is on the same page financially. :happy
madbrain wrote:
Fri Mar 23, 2018 3:27 pm
Not that I would advise doing this, but from what I understood in the past, there was no enforcement for repayment of subsidies. If you are owed a refund, then that will be nullified, but if you owe money solely because of the subsidy repayment, then you may be able to get away without paying. But IANAL nor a CPA. If we are talking about repaying a subsidy of $10K+, though, it may be worth talking to one.
It will come from our refund. Trying to calculate federal taxes more accurately this year to avoid that sort of excess contribution throughout the year. I think it will be between $4,000 and $4,500.

missingdonut wrote:
Fri Mar 23, 2018 3:59 pm
Is Part V of Form 8962 filled in?
I had planned to do our taxes on my own through TurboTax. As a sort of wedding present this family friend offered to complete our taxes free of charge. I wanted the experience of doing it on my own but once we hit this I thought it best to ask for some help. Completing through TurboTax had the subsidy coming out of our refund.

ShadowRegent
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Re: ACA subsidy payback- married Dec 2017

Post by ShadowRegent » Fri Mar 23, 2018 8:03 pm

There is an alternate calculation for the year of marriage (which is Part V of Form 8962). It may lower the amount of your repayment.

TravelforFun
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Re: ACA subsidy payback- married Dec 2017

Post by TravelforFun » Fri Mar 23, 2018 8:21 pm

Have you looked into 'Married Filing Separately'?

TravelforFun

Katietsu
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Re: ACA subsidy payback- married Dec 2017

Post by Katietsu » Fri Mar 23, 2018 8:32 pm

ShadowRegent wrote:
Fri Mar 23, 2018 8:03 pm
There is an alternate calculation for the year of marriage (which is Part V of Form 8962). It may lower the amount of your repayment.
+1

It appears that this is exactly what you are looking for and may completely take away all the repayment for the 11 months before marriage.

Topic Author
Lrt12
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Re: ACA subsidy payback- married Dec 2017

Post by Lrt12 » Fri Mar 23, 2018 8:35 pm

ShadowRegent wrote:
Fri Mar 23, 2018 8:03 pm
There is an alternate calculation for the year of marriage (which is Part V of Form 8962). It may lower the amount of your repayment.

Will definitely look into that. Thank you.

TravelforFun wrote:
Fri Mar 23, 2018 8:21 pm
Have you looked into 'Married Filing Separately'?

TravelforFun
It is my understanding that for the ACA subsidy it doesn’t matter if you are married filing separately, the household income is taken into consideration. I may be mistaken.

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