How do you handle ACA family glitch PTC

[pdvigil]

How do you handle the ACA family glitch and premium tax credit for a family with 2 health plans?  Per affordability test my wife is not eligible for ACA, but my daughter and I are. So we are considering being dropped from her employer based insurance to go on ACA but she is required to stay on her employer based "affordable" plan as employee only, which would revoke our family plan, and reestablish as employee only.   How do we handle the premium tax credit on a joint return, or associated 1095?

[Vanessa A]

If only 2 people in your household would be getting insurance through the Marketplace, you would just enter the 1095-A for those people. The 1095-A would come with just you and your daughters name and SSN on it.  As you walk through the steps of entering the 1095-A it will ask you who the coverage was for.

However, if you are saying that your wife makes too much money and puts the household income over the limit for the Premium Tax Credit, then neither you nor your daughter would be eligible for the credit. (being eligible for the credit is not the same as eligibility for the insurance plans)  The Premium Tax credit is based on household income, not individual income. 

If you would choose to file Married Filing Separate, you generally would not be eligible for the credit regardless of household income. 

[pdvigil]

The issue is known as the ACA "Family Glitch" where there is an affordability test to qualify for ACA.   The problem is that there are two tests.   The test is premiums must be under 9.12% of family income to qualify.  One for my wife based on an employee only offered by employee.    Under this test for employee only, my wife's premiums (about $235/mo)are about 4%, which does not qualify. But under the family insurance premium rate (about 711/mo) the premiums are about 13% which does qualify myself and my daughter.   This is per discussions with ACA marketplace broker.  And Yes you are REQUIRED  to use the combined family income for both of these tests, strange as it seems.  More info here:

https://www.healthcare.gov/glossary/affordable-coverage/

https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/final-rule-lessens-family-members-de...

https://www.commonwealthfund.org/blog/2022/family-glitch-fix-provides-new-affordable-coverage-option

https://www.healthinsurance.org/obamacare/no-family-left-behind-by-obamacare/

https://www.kff.org/health-reform/issue-brief/navigating-the-family-glitch-fix-hurdles-for-consumers...

https://www.americanbar.org/groups/health_law/section-news/2022/october/irs-finalizes-rule-fixing-th...

[pdvigil]

Sorry.   To clarify, no this is not a question of income being to high, as we are under the 400% of poverty rate for a family of 3.   This is a question of eligibility under the affordability test premiums must be above 9.12% of combined income to qualify. And the test is for employee only rate for employee and for family premium rate for other members, both using combined family income.

[Vanessa A]

So for the tax side, you would handle it by entering your 1095-A which will flow to form 8962. If only 2 people in the household are covered by the ACA, there is no special reporting issues to qualify for the Premium Tax Credit when the entire family is not covered on the policy. Your wife having different insurance will not affect the credit.  There is no longer a penalty for no health insurance, so anyone not covered on the 1095-A is simply left off of the form.