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Webinar Q&A: Helping Clients Understand Tax Filing and Health Coverage

March 6, 2018

ACE TA Center

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The following questions and answers came from the March 6, 2018 ACE TA Center webinar, Helping Clients Understand Tax Filing and Health Coverage.

Questions

  1. What is the impact on a client's advance premium tax credit (APTC) eligibility if he or she is legally married and chooses to file his/her taxes as a single household? Similarly, what is the impact on APTCs if he or she file as married but indicated on his or her Marketplace application that he or she were ‘married filing separately’? 
  2. If an AIDS Drug Assistance Program (ADAP) chooses to pay the excess advance premium tax credit repayment separately to the Internal Revenue Service (IRS), does name, address, social security number, etc. have to go on the check?
  3. What is the minimum amount of income required to file taxes?
  4. What if a consumer becomes Medicaid eligible, but stays on his or her Marketplace plan (referring to Charlene’s case study from the webinar)? 
  5. When does the individual mandate end?  
  6. What happens if a person did not know they were eligible for Medicaid and continued to pay for their employer coverage?

Answers

  1. What is the impact on a client's advance premium tax credit (APTC) eligibility if he or she is legally married and chooses to file his/her taxes as a single household? Similarly, what is the impact on APTCs if he or she file as married but indicated on his or her Marketplace application that he or she were ‘married filing separately’?
    If a legally married client files taxes as “single” or “married filing separately,” he or she cannot receive APTCs unless he or she qualifies for one of the following three exceptions: 1) the taxpayer qualifies as “head of household,” 2) the taxpayer is a survivor of domestic violence or spousal abandonment, or 3) the taxpayer is separated and has a “decree of separate maintenance” from his or her state (a legal device that allows married individuals to file as “single” before a divorce).
    If a client doesn’t meet any of these three categories, but must file or chooses to file as “married filing separately” or “single,” then he or she will not be eligible to receive APTCs. If your client indicated on his or her application that he or she would file as “married filing jointly” and received APTCs as a result, but then decides to file taxes as “single” or “married filing separately” for that coverage year, he or she will likely have to repay ALL of the APTCs he or she received during that year because he or she did not have the proper filing. 
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  2. If an AIDS Drug Assistance Program (ADAP) chooses to pay the excess advance premium tax credit repayment separately to the Internal Revenue Service (IRS), does name, address, social security number, etc. have to go on the check?
    Yes, programs should include client’s name, Social Security number (SSN), tax year, and portion that liability program is covering.
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  3. What is the minimum amount of income required to file taxes?
    The minimum income required to file a tax return for tax year 2017 depends on your income, age, and filing status. For example, in 2017, if you are under age 65 and single, you must file a tax return if you earn $10,400 or more, which is the sum of the 2017 standard deduction for a single taxpayer plus one exemption. The IRS has an interactive tax assistant tool to help determine if a person should file taxes: https://www.irs.gov/help/ita/do-i-need-to-file-a-tax-return
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  4. What if a consumer becomes Medicaid eligible, but stays on his or her Marketplace plan (referring to Charlene’s case study from the webinar)? 
    That person would not have to pay APTCs back to the IRS if he or she is found retroactively eligible for Medicaid.
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  5. When does the individual mandate end? 
    Starting with the 2019 tax year, proof of health coverage is no longer required for federal income taxes – this means someone will not have to pay a penalty fee if they were uninsured.
    Again, a state may enforce its own individual mandate, such as the one in Massachusetts (MA). Other states may decide to adopt an individual mandate in the future.
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  6. What happens if a person did not know they were eligible for Medicaid and continued to pay for their employer coverage?
    Individuals should be comparing coverage options to determine the best plan for them. 
    If a person was eligible for Medicaid but remained on his or her employer coverage, that individual could claim his or her portion of the premium for employer-based coverage on their taxes even if he was also on Medicaid. In some states, Medicaid provides secondary coverage to employer-based coverage (meaning Medicaid can provide help with the employee portion of the insurance premium for eligible individuals). Low-income individuals with employer-sponsored coverage whose premiums are unaffordable should check with their state Medicaid program to see if this premium support option is available. 
    We suggest referring individuals to tax preparation resources for additional information, such as the Volunteer Income Tax Assistance (VITA) program (https://irs.treasury.gov/freetaxprep/) offered by the IRS. 
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