Premium Tax Credit - Form 8962, Part I - for a case where one spouse moved out of an ACA plan to a medicare plan in 2024

[fkhalilz]

Hello,

My wife was on an ACA plan for first 9 months of 2024. She then moved to Medicare starting Oct 1st when she reached age 65.

Turbotax has computed our Monthly Contribution Limit on Line 8b of Part I of the 8962 Form. This amount is based on our (my wife and I) combined Modified AGI amount for the WHOLE YEAR. We are filing as "Married Filing Jointly".

So the question I have is this: Shouldn't the Modified AGI amount be pro-rated such that for the last 3months of 2024, it excludes my wife's income as she was not on the ACA plan during those 3 months? Obviously, this affects the amount of Premium Tax Credit allowed.

Thanks!

[BrittanyS]

The premium tax credit is determined backed on the combined household income for the entire year.  It does base the income off on the income you had Marketplace insurance.  If your household income increased during the last 3 months it would affect the amount of the credit she was eligible for during the months she had marketplace insurance. 

For more information, see the link below:

• What is the Premium Tax Credit

[fkhalilz]

Thank you @BrittanyS for your response!

Perhaps I did not make my question clear enough. Please allow me to clarify my question.

Our income did not change throught the year at all.  The only thing that happened was my wife turned 65 and move out of our ACA plan and into medicare. So for the last 3 months of 2024, I was the only one on the ACA plan.

So the question is for those last 3 months in 2024: shouldn't TurboTax only consider half of our income because she was no longer on the ACA plan during those 3 months?

By TurboTax using the entire household income throughout the year, it over inflates my portion of the income (which woud be half of our household income). If this income is not adjsuted down, then my eligibility for PTC is reduced or eliminated for the last 3 months of the 2024.

Thanks!

[BrittanyS · Accepted solution]

Unfortunately, no her not being on the plan does not change how the PTC is calculated.  The total household income is used to calculate the credit even if only one individuals is using the Marketplace insurance.  You must include all of your family's income for the entire year.  Per the IRS, "For purposes of the premium tax credit, your household income is your modified adjusted gross income for the year plus that of every other member of your family (see Q6) who is required to file a federal income tax return"

See the link below for more information:

• FAQ for the PTC

@fkhalilz 

[fkhalilz]

Thank you @BrittanyS !