I am retired and my company reimburses me for 75% of my medical premiums. I received a 1095A for the premiums, which was entered into Turbo Tax, which then put that information into the medical expense worksheet, which feeds the itemized deduction worksheet. I do not receive a 1099 for the premium reimbursement from my company. While I read that medical premium reimbursements are not taxable, it doesn't seem right to get the 100% deduction for paying for the premium when, I am being reimbursed for 75% of it. Does the 75% amount get entered on the medical expense worksheet as a reimbursement (assume line 13B) or, is the reimbursement amount not entered on my taxes?
Yes, the 75% medical reimbursement from your employer gets entered on your taxes if you itemize your deductions. Please see the following:
Hello,
When I take the standard deduction, I still receive a large tax credit from the "Premium Tax Credit" form 8962. This form uses the 1099A information entered to calculate the credit. There is no option to enter any HRA reimbursement on this form. Is this now correct?
I have a similar situation. I retired on August 31st and started in the marketplace on 9/1. I enter my 1095-A information into TurboTax and I'm being given a premium tax credit. My employer through a HRA, provides a fixed yearly contribution which offsets some of the premium costs. Where would I enter the HRA information to offset the premium tax credit? I know that I can't take both the premium tax credit and HRA reimbursement. I'm taking the standard deduction.
It depends. If the Health Reimbursement Arrangement money is included as taxable income on your Form W-2, then it was part of your pay and taxable income. If it was taxable income, you should be able to take the Premium Tax Credit with your Marketplace health insurance.
Employers have two choices. They can provide you with employer-sponsored group health insurance and offer an HRA to reimburse you tax-free for out-of-pocket costs like co-pays. Or, if they have fewer than 25 employees and are exempt from the ACA employer mandate, they can provide you with taxable money to buy your own insurance, which is essentially treated as a pay raise.
If the HRA funds are not included in the taxable income on your Form W-2, then indeed, this is a problem.
The HRA funds are not included in W2 so I do have a problem. Any suggestions?
There are no reporting requirements on the 1040 for your HRA. The employer contributions to your HRA are not reported in income. The payments you receive to pay for medical expenses are also not reported by you.
Unfortunately, although the HRA predates the ACA, the way the 8962 works didn't take into account that your ACA premiums might be reimbursed by your employer.
So, you are correct that you can't get the Premium Tax Credit and also get the reimbursements. Well, you CAN get them, but you don't get to enjoy both.
What you can do, is to determine the amount of the PTC that is being reimbursed by the HRA, and then add it as Other Income on Schedule 1 of the 1040. In TurboTax under Wages & Income, look for Less Common Income and choose Miscellaneous Income. Add it there with a description of "reimbursed PTC".
Thank you for the solution Bill! This should be addressed in TurboTax as I spoke to someone last night that I used to work with, who uses TurboTax, and she was unaware of the issue. She had already filed her taxes so she will need to amend her return.
Hello Bill, I have two concerns with this solution. The first is by declaring it as income, it increases my state tax due. The second is, if the point is to reduce the Premium on the 1095A to the amount I actually paid, putting it as income gives me a significantly different tax obligation from what I get when I simply reduce the premium amount on the 1095A form. Of course I don't like changing what I report is on the 1095A but, as you say, the IRS doesn't have a 8962 form that takes the reimbursement into account. Would I be better off changing the premium amount on the 1095A or do you feel it has to be reported as income? If yes, what do I do about my state?
Bill,
The solution that you provided sounded good but it did increase my state tax obligation and on the federal side it gave me a number that is not correct. The figure is in the middle of not taking the PTC at all and what TurboTax determines with PTC. Will TurboTax be providing a fix?
I wouldn't advise changing any amounts on your 1095-A form. The IRS looks closely at these, and you would probably get a letter if you do so.
Does your state allow you to claim Medical Expenses that weren't part of Itemized Deductions (if you claim the Standard Deduction)? Many states do. If so, you can claim your 1095-A premiums to offset the extra income reported.
Remember, it is actually income you received (to pay your medical expenses).
If you Itemize, you are claiming expenses/reimbursements in that section, so no problem there. Your AGI that transfers to the state is correct to calculate state tax.
I have no knowledge of a planned fix for this situation, but will report it as directed when we see these situations.
I found the paragraph below on Healthcare.gov which covers my situation as I was reimbursed for all my premiums. TurboTax needs to look at this issue as some people will be receiving larger returns than entitled. Also, TurboTax states that the IRS will not process your return without the 1095-A information which is contrary to what is stated on Healthcare.gov.
- You don’t have to fill out or include Form 8962, Premium Tax Credit, when you file your federal taxes.
- Keep your Form 1095-A with your other tax records
I have the same situation. I get a reimbursement from my retiree benefits in an HRA reimbursement scheme, but my insurance is from the Marketplace, and I am not allowed to get a Premium Tax Credit. When I enter the 1095-A into TurboTax, it wants to give me a huge reimbursement, which I am not entitled to.
To clarify the solution provided above, all we have to do is simply go into the TurboTax forms and delete the Form 8962, but make sure we have the 1095-A remaining in our tax return?
Thanks. And TurboTax, please pay attention to fixing this!! I could have very easily made an error by receiving an additional $20K+ refund that I was not entitled to, by inadvertently double-dipping in the HRA and the PTC!!! We expect better expertise from you.
Could another solution be, on the 8962, Part III Line 27, just add the credit that we're not supposed to get back in, just washing it out?
Rather than deleting Form 8962, you can change all the SLCSP premiums to 0 for the months you were not eligible for a premium tax credit, either because you were offered minimum essential coverage or were receiving reimbursement from other sources.
Once you enter 0 as the SLCSP, the credit that you are eligible for should also be calculated as 0.
The IRS says you may need to re-calculate the SLCSP reported on Form 1095-A if the amount reflected is incorrect because of eligibility changes. You can use the healthcare tax calculator if you were eligible for some months and not for others or some members of your family were eligible while others were not.
Hello RaifH,
Thanks for answering. I do have a few more questions. How do I know if I was eligible for each month? I did some more irs.gov checking and found a Interactive Tax Assistant (ITA) for "Am I eligible for the Premium Tax Credit". It never asked if I was reimbursed from a HRA and after answering all the questions it said, that I qualified for the Premium tax credit. So, on the IRS site, one Q&A says I am not eligible while another place says that I am. Would I be partially eligible if my HRA only covered some of my insurance? One of the first Turbo Tax responses indicated I needed to take out my reimbursement amount. If my insurance was $2000/month and my HRA paid $2000/month then, I would assume I am not eligible. If I paid $2000 and my HRA was only $1500 would I still lose all eligibility? If I don't lose all eligibility, how do I calculate/enter the amount I am eligible for?
I think this is another solution?
In the IRS Instructions for Form 8962, it says "Who Must File":
"You must file Form 8962 with your income tax return (Form
1040, 1040-SR, or 1040-NR) if any of the following apply to you.
• You are taking the PTC.
• APTC was paid for you or another individual in your tax family.
• APTC was paid for an individual you told the Marketplace
would be in your tax family and neither you nor anyone else
included that individual in a tax family.
If any of the circumstances above apply to you, you must file
an income tax return and attach Form 8962 even if you are not
otherwise required to file. "
I am not taking the Premium Tax Credit, because I am not allowed to due to my use of the HRA, therefore I don't need to submit the Form. In order to avoid generating the form in TurboTax, I did not enter my 1095-A into the program (actually, I deleted it after having already entered it). There is no real requirement to enter the 1095-A into TurboTax, as it actually doesn't get transmitted to the IRS -- only the information on the Form 8962, which reflects what is on a 1095-A gets transmitted. I'm assuming that when the IRS analyzes my return, they'll see that there is no Form 8962, and if they try to match it up with their receipt of my 1095-A, they'll just let it go because there was no Advanced PTC ever given to me on the 1095-A, and I'm not asking for any PTC or reconciliation via the Form 8962.
Does this make sense?
Yes, that makes perfect sense. If you aren't getting an Advanced Premium Tax Credit, you don't have to file the 8962, so you can side step the issue completely.