ACA Family Size

[equinecpa]

BEfore I make a big mistake I want to check something.

Completing form 8962 for taxpayer and spouse. Taxpayer is 65+ on social security and covered via medicare. Spouse is covered part year via ACA exchange coverage. On form 8962 where it says family size-tax program entered 2 which is the "tax family size" but not the "coverage family" -is this correct? Is there anywhere we enter "coverage family" size?

They have less than 70% of poverty income...and program is calculating a big credit refund...I'd hate to mess this up!

[kathyc2]

Something does not sound right. I would agree with family size of 2. 70% poverty level for a family of 2 is only around 11K. Are you saying that with the gross SS (not taxable) plus any earning from the other spouse their income is only 11K?

[TaxGuyBill]

BEfore I make a big mistake I want to check something.

Completing form 8962 for taxpayer and spouse. Taxpayer is 65+ on social security and covered via medicare. Spouse is covered part year via ACA exchange coverage. On form 8962 where it says family size-tax program entered 2 which is the "tax family size" but not the "coverage family" -is this correct? Is there anywhere we enter "coverage family" size?

They have less than 70% of poverty income...and program is calculating a big credit refund...I'd hate to mess this up!

Yes, Line 1 of 8962 would be 2 (number of exemptions on tax return).

The "coverage family" is only used in determining the insurance premiums, including the Second Lowest Cost Silver Plan. So if you need to manually look up the SLCSP, you only use the "coverage family".

[equinecpa]

Yes it is..

Something does not sound right. I would agree with family size of 2. 70% poverty level for a family of 2 is only around 11K. Are you saying that with the gross SS (not taxable) plus any earning from the other spouse their income is only 11K?

[kathyc2]

Interesting. Of the 11K how much was from SS and how much was from other income? When the application was filed, was their monthly income higher? Is the reason the non-SS spouse was covered only part of the year because they notified the market when there was a change in income?

People w/ income over 138% of poverty (100% for states w/o Medicaid expansion) were not supposed to receive credits.

If at the time they applied they met the income and then later notified market of change of income, I would agree with additional credits.

If not, then we get into the gray areas as preparers as to how much responsibility we have to determine if they should have been eligible to receive any credits or not.

[equinecpa]

OK I DID find something...

Here are the figs: SS 10000
Investment income 6000
Business loss (5000)

They are at 70% of poverty income, but last year their business was profitable and they would have been at household income of $22000 if everything had been the same.

The credit is coming from my checking off the box A on the HI less than 100% of federal poverty income worksheet. This is based on the estimated income being over 100% of FPI.

So they really do receive this credit? What baffles me is if their income had been the same as last year they'd end up repaying $200 of the credit. This just doesn't make any sense to me.

[kathyc2]

In my opinion, they probably are entitled to the tax return credit.

1) When they applied they used the best guess estimate of having a business profit and would be over 100%
2) The business loss is what put them under 100%. Unlike losing a job, it's is hard to pinpoint a time with business profit/loss in which they should have notified the marketplace of a change in income.

If they had chosen the SLCSP based on their estimate the cost for the year would be around 770 (22K x 3.5%), but the actual would turn out around 220 (11K x 2%). If they chose a lower than SLCSP, it is quite likely that the tax return credit is refunding them the total amount they had originally paid for premium.