Had Medicaid and marketplace insurance at the same time, how does this change deductions?

[CMNeedtaxHelp99]

I thought I should try to figure this out before tax time. I’m self employed and I accidentally had Medicaid and marketplace insurance for 2 months this year at the same time while getting advanced premium tax credits.

I had a renewal with Medicaid this year as part of the ending of continuing enrollment and later received a denial letter. I legitimately thought I qualified for an open enrollment period, so I signed up for marketplace insurance. The marketplace checked that I was losing coverage, which I thought I was, and deemed me eligible.

It turns out that my Medicaid was still active and I was moved to a different case and type. I canceled my marketplace coverage as soon as I knew about my Medicaid coverage still being active.

It took months for Medicaid to review my case, but my Medicaid should finally be ending and I signed up for marketplace coverage for December.

I understand that I will have to pay back my tax credit for the two months and this will be resolved using form 8962 and form 1095-A.

My question is, self-employed people can use premiums they paid for healthcare to reduce their taxable income, would I be able to do that for the two months I had both Medicaid and marketplace? It doesn’t seem like something I should be able to do, but I’m not sure. And would it be the whole amount for the two months since I shouldn't have received the tax credits? 

I’ve tried reading on this topic and I’ve read is that people who are self-employed cannot do this if they had or were eligible for an employer-subsidized health plan. I was not able to find anything regarding overlapping Medicaid and marketplace coverage.

Any help is greatly appreciated.

[DaveF1006]

Yes, you may be able to qualify for both if you are not over the Medicaid limit for income. The income limits vary from state to state so you will need to research the Medicaid income limit for your state.

An employer-subsidized plan is one that is offered if you are an employee. If you are an employee and self-employed at the same time, then you would not be eligible to deduct your premiums if you enrolled in the plan or if offered by an employer.

[CMNeedtaxHelp99]

The issue is that I wasn't eligible for Medicaid during the some of the time I had it this year.  While I legitimately thought I had lost coverage, there was a mistake that kept it active while I also had Marketplace Insurance that I was paying for.

I did eventually get my Medicaid coverage ended and later signed up for Marketplace again because I had canceled it.

However, for my taxes I am not able to find any documentation about the self employment insurance premium deduction and having both marketplace and Medicaid insurance at the same time. 

In general, I'm not very comfortable taking this deduction for the months I had both. I recieved1095a, would there be a way to only use the premiums from the months I only had marketplace coverage? 

[ThomasM125]

As a self-employed individual, you may benefit from deducting the cost of health insurance on your tax return. The amount you can deduct can be limited by your advance premium tax credit however. So, you need to enter in the information from your Form 1095-A to determine the amount of your health insurance deduction. The Medicaid insurance premium would not be disallowed as a deduction since there is not a restriction placed on which health insurance you chose to acquire. However, if you need to pay back premiums in a later year, you may have to account for that on your tax return if they caused a reduction in your taxes in the year you deducted them. 

You could only deduct the premiums for the marketplace coverage if your taxes did not increase for some reason when you included the Medicaid insurance premiums.

[CMNeedtaxHelp99]

Thank you for the reply. 

My Medicaid did not have premiums but my marketplace insurance did.

At the moment, I am looking at having to pay back the advance tax credit for the months I had both Medicaid and Marketplace due to how the advance tax credits work.

How would that work with calculating the self employed premium deduction? Since I was not eligible for the tax credit and will be paying it back, would I then be able to deduct the whole premium? 

Or are the two months I had both not eligible at all for the deduction? Due to having another form of health insurance, which in this case would be Medicaid?