Minimum Value Healthcare Coverage Refused In Favor Of ACA Plan

[FuskieBP]

I started out the year with an ACA plan and a subsidy based on not having an estimated income for the year. In March, I subsequently found a job that offered a minimum value healthcare plan starting in May. However, because this plan was worthless (no prescription coverage, doctors not in-network), I chose to stick with the ACA plan. I updated my income in April after making this determination.

I received two 1095-A forms. The first covered January through April, reflecting my high subsidy. The second, covering May through December, reflected a reduced subsidy based on my revised income estimate.

However, because the employer plan technically met the minimum value standard, I believe I am not eligible for the subsidy I received from May through December. When filling out the 1095-A in TurboTax, I put the received subsidy amount, and TurboTax calculated, based on actual income and subsidy received, that I have to pay back $1655.  But if I didn't qualify for a subsidy at all, the amount I should have to pay back would be $3429.

Is there a cap that limits my payback to $1655 and not the full $3429? Is there an option in TurboTax or on Form 8962 where I indicate that I had access to and refused a minimum value plan, so that TurboTax can calculate the correct amount that has to be paid back? How do I handle this so that I don't get flagged by the IRS when they process my employer's 1095-C (which indicates I was offered and refused their health plan) and compare it to my 1095-As?

[RobertB4444]

It sounds like the employer plan did not meet the minimum standards.  If that is the case then you can disregard it and just enter the 1095-A as you received it.

In order to meet the minimum standards it would have to cover at least 60% of all of the cost of benefits.  If it did not then you can disregard it.

[FuskieBP]

The 1095-C clearly states that the company thinks its offering meets the minimum requirements. As was pointed out to me, suitability to my needs does not mean it is not a compliant plan. A compliant plan is supposed to serve some imagined "average." My needs are not average.  It may be the bare minimum to meet the standard, but apparently, it does meet the standard.

So, my original question stands.  How am I supposed to tell TurboTax that I was eligible for a minimum standard healthcare plan and turned it down in favor of a more appropriate HCA plan? And more importantly, how is that supposed to be recorded in the tax forms if it is not a scenario TurboTax was designed to consider?

[RobertB4444]

When you are entering the 1095-A into the system the easiest way to avoid receiving the credit is to change the amount in column B to 0 (or to 0.01) so that it shows that you were not entitled to a credit for any of the months that that is zeroed out.

[FuskieBP]

Zeroing out Column B indicates that no subsidy was applied during the year, and as a result, I go from a federal tax liability to a refund. That is not correct either and will be contradicted by the 1095-A that shows I DID receive the subsidy.  I should owe MORE because of the subsidy I ineligibly received, not less. 

There has to be an option that is backed by supporting documents, not contradicted by them. I want less IRS attention, not more.

[MarilynG1]

Enter both your 1095-A's as you received them.  You could combine them into one entry.  Form 8962 for the PTC calculates based on your total income for the year, and since you were eligible for the subsidy for some months, has calculated that you need to pay back only a portion of what you received.  You can review the calculations on Form 8962. 

The IRS will not question your eligibility for an employer plan, that you didn't enroll in.  Many people choose to enroll in a Marketplace plan, rather than an expensive, inferior employer plan they were offered.  If your employer premiums are more than 10% of your income, you have the 'too expensive' option.  An employer plan that covers a family, for example, is often much higher priced than a Marketplace plan for the same coverage. 

There is no place to indicate this in your tax return, however.

@FuskieBP