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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For more training• http://eitcoutreach.org/aca/webinar

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