With the Advanced Premium Tax Credit, you only would have to make the adjustment if you had to pay back some of the advance and then deducted it so you do not have to report. The MLR rebate is a rebate of part of the insurance premiums (a purchase price adjustment). If you did not deduct the premium payments on Form 1040, the rebate is not taxable whether received as a cash payment or applied as a reduction in the amount of premiums due. @zellgrotto
There is currently no IRS guidance for a MLR Rebate in connection with the Premium Tax Credit (and even if/when that does come, in most cases it won't affect anything).
So under current IRS guidance, you don't need to do anything (assuming you did not benefit from a tax deduction as a Medical Expense or from the Self Employed Health Insurance deduction).
You may have to report your MLR. If you received the MLR directly from the insurer and either deducted the premiums as a medical expense or received a Premium Tax Credit, you would have to report it.
MLR rebates paid by Insurance Company, either as cash payments or as premium reductions, are return premiums. Your MLR rebate is taxable to the extent that he received a tax benefit from the deduction.
If there is a premium reduction paid through the employer, you received a lower premium in the year of the rebate, and since medical premiums are not taxable income, it is tax-free. However, if your employer pays you the MLR it is included in your taxable income included on your W2.
Thank you!
I did receive a Premium tax credit, so it looks like I'll have to report it as income, even though I didn't itemize medical expenses that year.
But when I look for where to report it in TurboTax, I can't find a category under Miscellaneous Income in which it fits. Do you know where I would report it?
With the Advanced Premium Tax Credit, you only would have to make the adjustment if you had to pay back some of the advance and then deducted it so you do not have to report. The MLR rebate is a rebate of part of the insurance premiums (a purchase price adjustment). If you did not deduct the premium payments on Form 1040, the rebate is not taxable whether received as a cash payment or applied as a reduction in the amount of premiums due. @zellgrotto
Where do I look on last year's 1040 to see if these health insurance premiums were deducted? I see that we got the Premium Tax Credit.
There is currently no IRS guidance for a MLR Rebate in connection with the Premium Tax Credit (and even if/when that does come, in most cases it won't affect anything).
So under current IRS guidance, you don't need to do anything (assuming you did not benefit from a tax deduction as a Medical Expense or from the Self Employed Health Insurance deduction).