Mandatory 8962?

[Black Bart]

Client came by the office: single, age 50, total income from $9K W-2, ordinarily only files to get a bit of EIC and W/H back. Said he signed up for Obamacare which went into effect in September and that he pays nothing for the insurance. Didn't have the 1095-A with him - told him to look for it in the mail and bring everything back later. Then I was going to use the 1095 to complete form 8962.

But...got to wondering about it. This guy's below-filing threshold household income would exempt him from any penalties on form 8965, Part II, 7a.

Question - if I exempted him, must 8962 still be filed in this case? He can't owe them anything (income too low) and they can't owe him anything (he paid nothing). Obviously I'm trying to skip filing a "no effect" form for something that doesn't need reconciling. But, does 8962 have to be filed for all Obamacare enrollees, no matter what the situation?

This stuff is enough to drive you nuts.

[TXEA]

Would he not have qualified for Medicaid at that income level? I thought if the taxpayer qualified for Medicaid he would not be eligible to purchase from the Exchange. Don't know this for sure. I am lucky in that I think virtually all my clients have coverage and very few would qualify for a subsidy. So, I have not studied the ACA rules in fine detail; although I have taken several CPE courses on the issue.

[David1980]

Would he not have qualified for Medicaid at that income level? I thought if the taxpayer qualified for Medicaid he would not be eligible to purchase from the Exchange. Don't know this for sure. I am lucky in that I think virtually all my clients have coverage and very few would qualify for a subsidy. So, I have not studied the ACA rules in fine detail; although I have taken several CPE courses on the issue.

Well, yeah, but it's based off estimated income. Possibly income was higher in prior years so he qualified off expected income between 100% and 400% of poverty level and then lost a job or something so the income ended up being under 100%.

[Corduroy Frog]

I think so

Bart I've got the same concerns as TXEA, except for the fact that he told you he is getting insurance.

He may have applied, but then got dumped into Medicaid upon application. That would reconcile to his statement that he's not paying anything. Not sure this guy would know the difference.

The only way for the preparer to know for sure is if he has a 1025-A. However, all of us were told in seminars that this requirement is upon the insurance industry, meaning the requirement won't likely be enforced for 2014. So he might be covered and still not have a 1025-A.

If it IS indeed true that he purchased insurance from the exchange (and didn't pay for it), the 8962 would absolutely be required. Reason being if he paid NOTHING, the only reason for that would be because of a tax credit sufficiently large to absorb the gross premium. This would require a regurgitation of the credit taken versus the credit entitled.

[TXEA]

Well, yeah, but it's based off estimated income. Possibly income was higher in prior years so he qualified off expected income between 100% and 400% of poverty level and then lost a job or something so the income ended up being under 100%.

Well, yeah, but, if you read the post "normally only files to get a little EIC" , my assumption was reasonable.

[Burke]

It was my understanding that if insurance was applied for through the Marketplace and no 1095-A was received, the TP could go back onto that website and get that information.

[David1980]

It was my understanding that if insurance was applied for through the Marketplace and no 1095-A was received, the TP could go back onto that website and get that information.

It depends on state, but yes I think you'd be right on this one.

http://www.irs.gov/Affordable-Care-Act/Individuals-and-Families/The-Health-Insurance-Marketplace

For the 15 states that had marketplaces they need to go through the state marketplace to get a replacement 1095-A. And there isn't much guarantee that those state marketplaces actually make it available on their website. They might have to call and ask for a copy to be mailed in some states.

Assuming that taxpayer is in Arkansas though, they would have gone through healthcare.gov. In which case they can download a PDF from their healthcare.gov account. https://www.healthcare.gov/taxes/mar...e-health-plan/

[Black Bart]

... If it IS indeed true that he purchased insurance from the exchange (and didn't pay for it), the 8962 would absolutely be required. Reason being if he paid NOTHING, the only reason for that would be because of a tax credit sufficiently large to absorb the gross premium. This would require a regurgitation of the credit taken versus the credit entitled.

Dear amphibian friend,

Are you saying that if the credit he was entitled to (because income is lower than anticipated) is less than the credit he actually got, then they are going to refund him the difference even though he paid nothing? Free money like EIC?

[ACCURATETAX]

It sounds as though when he signed up for the ACA he stated probably 2012 income and it was above the 100% of poverty level and he was granted a subsidy based on his given info. Since he received a subsidy there is a 1095-A that will be reported to the IRS and him also from the marketplace. He will need that to file for the CREDIT and Reconcile the credit with the Subsidy. The problem is if he is below the 100 % poverty level on his 2014 stated income the credit should be 0 because he must go on medicaid and cannot get the subsidy or credit and he will have to pay it all back. This will show up on His Worksheets that will create from the 8962 form and the 1095A. He will also have to file for a hardship exemption to be relieved of the penalty too for the months uninsured. All of which is a tax and can be levied. This is not fair but we knew this was coming for those who did not understand that they needed to project there income for 2014 not 2012 0r 2013 if at all possible. There will be a 1095A according to IRS from the marketplace this year unless there was a recent bulletin i missed. There will not be one from private insurance or employer provided insurance until next year and that i think will be a 1095C GOOD LUCK. I hope it doesn't turn out like I explained but my understanding is thats how its going to happen.

[ACCURATETAX]

OK…I went on healthcare.gov to see if there was anything about the 1095A not being sent out this year and this is what they say:

Form 1095-A and your tax return

If you or anyone in your household enrolled in a health plan through the Health Insurance Marketplace in 2014, this tax season you’ll get a new Form 1095-A — Health Insurance Marketplace Statement. You’ll get it in the mail by early February and use it to file your 2014 federal income tax return. Keep it with other important tax information, like your W-2 forms and other tax records.

When you get Form 1095-A, make sure the information matches your records. Check things like coverage start and end dates and the number of people in your household. If you think anything’s wrong, contact the Marketplace Call Center.

[Koss]

Form 1095-A

If the taxpayer is really bought insurance at healthcare.gov, and he is really paying nothing for it, then that means that the Advance Premium Tax Credit was equal to or greater than the premium. In other words, he was receiving an advance premium tax credit (also referred to as a subsidy), and he will receive Form 1095-A. Form 8962 is required in order to determine whether he received too much premium tax credit or too little.

The issuance of Form 1095-A is not optional.

Employers and insurance carriers are not required to issue Forms 1095-B or 1095-C for 2014. But Form 1095-A will be issued by the marketplace to anyone who purchased insurance through the marketplace.

If he is really paying nothing, it is indeed possible, as previously mentioned in this thread, that the taxpayer is actually on Medicaid.

He may have logged into the marketplace, entered his data, and then was informed that he is eligible for Medicaid. So in his mind, he "got insurance from the marketplace," but in reality, he was simply told to apply for Medicaid. He may have transferred to the state's Medicaid website.

If he is on Medicaid, he won't get a Form 1095-A. Medicaid is qualifying coverage, but it does not involve the premium tax credit, and it is not "insurance purchased through the marketplace."

The answer to this puzzle is pretty straightforward: The tax pro needs to see the guy's insurance card, or have him log back into the marketplace at the tax pro's office. That will tell you whether he has Medicaid or insurance from the marketplace.

If he has Medicaid, then Form 8962 is not required. If he has insurance through the marketplace, then he will get Form 1095-A and Form 8962 is required.

BMK

[Corduroy Frog]

Dear amphibian friend,

Are you saying that if the credit he was entitled to (because income is lower than anticipated) is less than the credit he actually got, then they are going to refund him the difference even though he paid nothing? Free money like EIC?

From the original post, he might not have even HAD insurance, and was too confused to know it. However, if he actually DID get insurance from healthcare.gov then we can move on to the 8962.

If he actually did use a credit, then there will have to be a calculation on the 8962. And if he is entitled to the difference, he will get it tacked on to his usual refund. The calculation could just as easily go in the other direction, and he could have a larger credit than what he was entitled. In that event the difference would appear as an extra tax on line 46 of the 1040.

If he really did have insurance and paid NOTHING, it is certain he used a credit. If not, he would have had to pay something.

[Corduroy Frog]

Have you seen any yet??

The issuance of Form 1095-A is not optional.
BMK

No, it is not optional, but consider the requirement is placed on the government, or agency thereof. A fundamental practice of
the government is to govern everyone but themselves. Governments are not known to be as perfunctory in their duties as they
are not accountable for it, whereas if they can beat up individuals and small businesses they will do it in a heartbeat.

Have you actually seen any of these forms 1095-A yet? I have the same outlook for 1095-B and 1095-C requirements
placed on huge institutions that the government will not enforce.

My best guess is that there will be some 1095-A forms issued, some of them issued too late to be any good, and others not
issued at all even though required. Sorry to be cynical. Some of the cynicism comes from real world experience, and some
of it probably from unfounded suspicion.

[BP.]

Have you actually seen any of these forms 1095-A yet?

Yes. With a cover letter dated 16 Jan 15.