Post on 14-Dec-2015
Affordable Care ActPremium Tax Credit
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Definitions
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• Affordable Care Acto A combination of laws passed to expand health care coverage options
while lowering the cost of health care and requiring many Americans to obtain health insurance.
• The Marketplaceo Online or over the phone
1. health coverage options2. compare health insurance plans based 3. choose a plan; and purchase coverage.
Step 1• Intake and Interview Form• Did the Taxpayer, Spouse, and all dependents
have Minimum Essential Coverage (MEC)?• The Taxpayer answers:
o Yes: Check yes on line 61 of the 1040, move to step 6o No: Move on to step 2
In TaxWise
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Wait, What is MEC?
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MEC Does Not Include
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Step 2• Is this tax payer exempt from coverage gap
fees?
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More Exemptions
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TaxWise Form 8965• Part 1 = Exemptions obtained through the
marketplace• Part 2= Everyone will answer
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TaxWise Form 8965 Cont.
• Part 3 = All other exemptions.
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Step 3Shared Responsibility
Payment• The greater of:
o 1% of household income above the filing threshold, oro Flat dollar amount
• $95 per adult, $47.5 per child• Max of $285 for a family
o But capped at the cost of the national average premium for a bronze level health plan available through the marketplace.
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Filing ThresholdsFiling Status Age Must file if gross
income exceeds
Single Under 65 $10,150
65+ $11,700
Head of Household Under 65 $13,050
65+ $14,600
Married Filing Jointly Under 65 (both spouses)
$20,300
65+ (one spouse) $21,500
65+ (both spouses) $22,700
Married Filing Separately
Any age $3,950
Qualifying Widow(er) Under 65 $16,350
65+ $17,550
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Shared Responsibility Payment
• The greater of:o 1% of household income above the filing threshold, oro Flat dollar amount
• $95 per adult, $47.5 per child• Max of $28
o But capped at the cost of the national average premium for a bronze level health plan available through the marketplace.
• Example:o Joy is single with no dependents. Joy’s household income is $30,450.
Her filing threshold is $10,150. 1. $30,450-10,150 = $20,3002. $20,300 * 1% = $203
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2014 National Average Bronze Plan Premium
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Number of months without MEC or exemption
Family Size
1 2 3 4 5+
1 204 408 612 816 1,020
2 408 816 1,224 1,836 2,448
3 612 1,224 1,836 2,448 3,060
4 816 1,632 2,448 3,264 4,080
5 1,020 2,040 3,060 4,080 5,100
6 1,224 2,448 3,672 4,896 6,120
7 1,428 2,856 4,284 5,712 7,140
8 1,632 3,264 4,896 6,528 8,160
9 1,836 3,672 5,508 7,344 9,180
10 2,040 4,080 6,120 8,160 10,200
11 2,244 4,488 6,732 8,976 11,220
12 2,448 4,896 7,344 9,792 12,240
Shared Responsibility Payment
• The greater of:o 1% of household income above the filing threshold, oro Flat dollar amount
• $95 per adult, $47.5 per child• Max of $28
o But capped at the cost of the national average premium for a bronze level health plan available through the marketplace.
• Example:o Joy is single with no dependents. o Her flat dollar fee is $95, her 1% of household income fee is $203.o Her annual national average premium for bronze level coverage for
2014 is $2,448
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Step 4Back to Taxpayers with
Coverage• Did the taxpayer purchase MEC through the
marketplace?o Yes – figure the premium tax credito No – you are done
• Premium Tax Credit (PTC)o Helps pay for coverage purchased through the marketplace in the form
of a refundable tax credit.o Must file a joint return if marriedo Must be between 100%-400% of the federal poverty levelo Taxpayer claiming PTC cannot be a dependent
• Advanced Premium Tax Credit (APTC)o When health insurance was purchased, a projection of 2014 family size
and income was made and the APTC was paid in advance to the health insurance company.
o This helps lower the taxpayers monthly payment
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Federal Poverty Lines• Use the taxpayers Modified adjusted gross
income (MAGI) to determine eligibility
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MAGI• Modified adjusted gross income is
adjusted gross income (AGI) +excluded foreign income +nontaxable social security +tax-exempt interest +MAGI
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Form 8962 in TaxWise
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APTC• If there is no advancement of the PTC or only part
of the PTC is claimed in advance, the remainder can be claimed as a refund on the tax return.
• If excess PTC is claimed in advance, it must be paid back.
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APTC Repayment Limits
Income (as % of Fed Poverty Line)
Single filing status All other filings statuses
Less than 200% $300 $600
200% to 299% $750 $1,500
300% to 399% $1,250 $2,500
400% and above No limit No limit
Form 8962 Cont.
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Outline of Steps1. Do you have full year MEC?
1. Yes – Move to step 42. No – Move to step 2
2. Are you exempt from purchasing coverage?1. Yes – complete form 89652. No – Move to step 3
3. Figure the Shared Responsibility Payment1. That is the last step for taxpayers without coverage
4. Did the taxpayer purchase MEC through the Marketplace?1. Yes – Move to step 52. No – Done
5. Figure the Premium Tax Credit – Form 89621. That is the last step for taxpayers with MEC
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