[This is part of a series of articles by Ken Berry on new developments relating to the Patient Protection and Affordable Care Act of 2010 (aka “Obamacare”).]
The government seems to have worked out most of the kinks in www.healthcare.gov, the online site used to sign up for Obamacare. But it has yet to address another glitch that surfaced almost two years ago: Language in the law that prevents married taxpayers who file separate tax returns from qualifying for special tax subsidies.
Now, as the March 31 deadline for individuals to obtain health insurance coverage rapidly approaches, the Obama administration has proposed a temporary fix.
Here’s the skinny: Beginning in 2014, an individual who uses the health insurance marketplace may be eligible for a premium tax credit. This tax credit can help make health insurance coverage more affordable for people with moderate incomes. Generally, a taxpayer is eligible for the premium credit if all the following requirements are met:
- You acquire health insurance through the marketplace;
- You are ineligible for coverage through an employer or government plan;
- You fall within certain income limits (see sidebar);
- You can’t be claimed as a dependent on another person’s tax return; and
- You don’t file a separate return as a married individual.
It’s the last requirement that is causing most of the ruckus. The Treasury Department has acknowledged that this rule could lead to inequities, especially when it involves people who are victims of dispute, on the brink of divorce or are living apart for other valid reasons, such as when one spouse is in prison. In the preamble to regulations on the premium tax credit that were issued back on May 23, 2012, the Treasury promised to correct this flaw, but it hasn’t done so yet.
A few other groups — including immigrants and families with twins — have also experienced problems with enrollment at this late stage. In these cases, the software designed for www.healthcare.gov hasn’t been able to properly accommodate their life situations. This is another sticky issue the Treasury has vowed to address.
As the finish line nears – the initial open enrollment period for individuals ends on March 31 – the Treasury is unofficially taking steps to allow married survivors of domestic abuse to claim subsidies for obtaining health insurance coverage, even if they file separate returns.
According to a report in the Washington Post, an anonymous Treasury spokeswoman said, “We take seriously the compelling rationale to allow married survivors of domestic abuse and others facing similar circumstances to claim the premium tax credit even if they are unable to file a joint income tax return.” For those other than battered spouses who will not be covered by the action this week, the spokesperson claimed the Treasury would continue to “explore ways to address the situation.”
But there’s no such olive branch being extended to other married people filing separate returns. At least for the time being, these individuals will not be eligible for the tax subsidies. We’ll continue to monitor the proceedings.
What Are the Income Limits?
Taxpayers who have annual household income between 100 percent and 400 percent of the federal poverty line for their family size may be eligible for the premium tax credit. An individual who meets the income requirements must also meet the other eligibility criteria.
For 2014, residents of one of the 48 contiguous states or Washington, D.C., the following generally illustrates when household income would be between 100 percent and 400 percent of the federal poverty line.
- $11,490 (100%) up to $45,960 (400%) for one individual.
- $15,510 (100%) up to $62,040 (400%) for a family of two.
- $23,550 (100%) up to $94,200 (400%) for a family of four.
Go to https://www.healthcare.gov/how-can-i-save-money-on-marketplace-coverage for more details.