ACA Subsidy Legally Married, but Separated

[wehotex]

I helped a man through the site. Even though I clarified that they were living in separate residences, file taxes separately, they still included her spousal income to disqualify him for a subsidy. He's 63 yrs old; wife is on Medicare thru Disability. Any way to get around this? If it was only his income, he'd qualify. He makes about $1,700/month.

 

[AllenChicago]

I helped a man through the site. Even though I clarified that they were living in separate residences, file taxes separately, they still included her spousal income to disqualify him for a subsidy. He's 63 yrs old; wife is on Medicare thru Disability. Any way to get around this? If it was only his income, he'd qualify. He makes about $1,700/month.

The first thing he has to do is get rid of the "Married Filing Separately" situation. That disqualifies for subsidy. Tell them to file jointly. Her Social Security Disability Income would not reduce the subsidy level, according to the mighty IRS and HHS.

See the next to the last paragraph at this Healthcare.gov page:
https://www.healthcare.gov/what-inc...rovide-when-i-apply-for-marketplace-coverage/
ac

 

[wehotex]

The first thing he has to do is get rid of the "Married Filing Separately" situation. That disqualifies for subsidy. Tell them to file jointly. Her Social Security Disability Income would not reduce the subsidy level, according to the mighty IRS and HHS.

See the next to the last paragraph at this Healthcare.gov page:
https://www.healthcare.gov/what-inc...rovide-when-i-apply-for-marketplace-coverage/
ac

If they file jointly, wouldn't that result in a higher tax bill though? wifey hasn't filed a return in many years. She makes $1275/mo and likes not paying taxes. Together, they make about $3,000/mo, $36,000 gross. Of course, after standard deductions and exemptions, that would bring them down a bit. $36,000 - 20,000= $16,000 taxable income. Still not much and maybe worth the cost of more of Obamas free shiit

 

[AllenChicago]

If they file jointly, wouldn't that result in a higher tax bill though? wifey hasn't filed a return in many years. She makes $1275/mo and likes not paying taxes. Together, they make about $3,000/mo, $36,000 gross. Of course, after standard deductions and exemptions, that would bring them down a bit.

I don't know about the implications for their personal income tax return, WeHotTex. I can only speak to what the ACA says about filing jointly and the SSI Income's effect on subsidy amount.

 

[russelltw]

I had a similar case. They were not excited about filing jointly. Basically it was either file jointly and get a subsidized plan ($9,000 in subsidy) or enjoy not paying taxes with no insurance. It did not take long for them to change their minds.


Where their (and everyone else on ACA) premiums will go next year is the big question. I hope to talk to one of my carriers about how high the claims are on ACA business after mid year. Many of those I wrote will be wearing out their insurance card after it arrives. Good for them now, but it may be short lived.

 

[wehotex]

I had a similar case. They were not excited about filing jointly. Basically it was either file jointly and get a subsidized plan ($9,000 in subsidy) or enjoy not paying taxes with no insurance. It did not take long for them to change their minds.


Where their (and everyone else on ACA) premiums will go next year is the big question. I hope to talk to one of my carriers about how high the claims are on ACA business after mid year. Many of those I wrote will be wearing out their insurance card after it arrives. Good for them now, but it may be short lived.

In my couple's case, they still only earn $3000/mo between them or $36,ooo/yr. That's still a level where 2 household income would presumably qualify for a subsidy.

 

[Ann H]

If they file jointly, wouldn't that result in a higher tax bill though? wifey hasn't filed a return in many years. She makes $1275/mo and likes not paying taxes. Together, they make about $3,000/mo, $36,000 gross. Of course, after standard deductions and exemptions, that would bring them down a bit. $36,000 - 20,000= $16,000 taxable income. Still not much and maybe worth the cost of more of Obamas free shiit

The filing status of married filing joint enjoys a lower tax rate than the filing status of married filing separate. Will she have a larger tax bill, though? Yes, but only because she's not filing tax returns now.

Standard deductions and exemptions are calculated AFTER Adjusted Gross Income (AGI), so they don't matter when you are calculating MAGI. You only use the "before the line" deductions, which are on page 1 of the Federal Form 1040 tax return. Deductions and exemptions on the next page are irrelevant to the subsidy calculation.

 

[wehotex]

The filing status of married filing joint enjoys a lower tax rate than the filing status of married filing separate. Will she have a larger tax bill, though? Yes, but only because she's not filing tax returns now.

Standard deductions and exemptions are calculated AFTER Adjusted Gross Income (AGI), so they don't matter when you are calculating MAGI. You only use the "before the line" deductions, which are on page 1 of the Federal Form 1040 tax return. Deductions and exemptions on the next page are irrelevant to the subsidy calculation.

Thanks for clarifying that. So that's how a small business owner can get nearly Free Obamacare since a business can show low, zero or negative profit. Married people get ALL the breaks! This is another reason why marriage matters and should be for ALL.