Taxpayer had health insurance through employer; however, she called the Marketplace in January of 2015 to determine if she would be eligible for the PTC for 2015. She told the representative what her income was (she is at the 150% FPL) and what she was currently paying for coverage through her employer and what the employer plan covered. The representative set her up to receive the PTC so she dropped the employer coverage. She brings in her tax documents for 2015 and during our interview I ask her what the cost of the premium had been through her employer and that cost was below the 9% of income so I ask her if the employer coverage did not cover the minimum value requirements. She doesn't have a clue but told me she told the person through the Marketplace everything that the employer insurance covered. She then asked me why the representative would set her up to receive the PTC if she did not qualify so she says she must have qualified. So, I was hoping for input from other tax preparers. As tax preparers, are we to assume the Marketplace representatives did their due diligence before offering the PTC to taxpayers? Or are the tax preparers the only group that has to police the taxpayers and tell them they have to pay back the PTC for which they thought they qualified?
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I believe it depends on the type of employer client works for. ALE (over 50 FTE employees) are required to provide 1095-C with offer of coverage information. If client works for ALE, it is my understanding that you will need 1095C to complete return. If small employer, I believe you can rely on marketplace determination of eligibility. -
PTC - Taxpayer Not Eligible
Employer has fewer than 50 FTE. So, I can rely on marketplace determination of eligibility? Do you have a reference regarding the marketplace determination of eligibility?Originally posted by kathyc2 View Post
Thanks for your response.
Peggy SiouxComment
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Sometimes the "Marketplace" makes grievous mistakes. I had one last year who, when she brought in her 1095-A, confounded me as it did not appear that she qualified for the PTC based on her income. Her W-2 alone was more than the maximum and had been for years. Not only that, she wasn't going to qualify in 2015 either, even though it was then April and she had continued to receive it! She called the Marketplace and asked them what income they had used to calculate the qualification and it was more than $10K less than what she makes. She then called her "facilitator/broker" who set it up and never got a response from her. Upshot was, she had to pay it all back, and will have to do it again this filing season.Comment
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PTC - Taxpayer Not Eligible?
So are we, as tax preparers, the responsible party to determine if taxpayers' employer insurance meets the affordability and minimum value requirements. In my research, the affordability test is based on the employee's portion of premium only, correct? The calculations do not take into consideration the yearly deductibles as well, correct? I asked taxpayer to ask employer if the employer insurance meets the minimum value requirements but being the employer is a small employer they probably won't know either. From my research, it appears that the employer's insurance was affordable (even though very poor coverage) and appears to me to be comparable to the Bronze Plan. It seems unfair that because Marketplace made an error in setting her up with the PTC that she now has to pay it back when she is definitely very low income.Comment
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My opinion is that the determination of PTC eligibility if not determined at the tax return level is due to the fact that the tax return does not have a place to check if employer coverage is available on any tax forms. If a small employer there is also not an employer generated form we can use as to if offered/affordable.
As far as payback, wouldn't she be limited to $300 payback if single based on 150% FPL?Comment
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You may find the info on page 6, Determining Eligibility at Time of Enrollment helpful.... https://www.irs.gov/pub/irs-pdf/p974.pdfComment
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PTC - Taxpayer Not Eligible?
I found it very helpful; thank you. What I find odd is how could the Marketplace determine this taxpayer's portion of premiums as unaffordable. Her income for 2014 and 2015 are very similar with 2014 being slightly higher than 2015. My calculation, based on the info that the taxpayer is providing, is the premium is 4.9% of household income - well below the threshold. However, the way I read page 6 is that if the Marketplace determined her as eligible and all the info taxpayer provided the Marketplace was accurate, she would not have to pay back the PTC. Is that how you are reading as well?Originally posted by kathyc2 View PostComment
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If you look at Example 1 on page 6, Celia was not able to take the PTC because the coverage offered was affordable. Assume the employer is a small employer so no 1095 will be prepared. Question --- how will you know what was offered by the employer for 2015?
1) Will you take the employee/client's word for it?
2) Will you get something in writing from that employer? What if the employer doesn't respond?Last edited by ttbtaxes; 02-02-2016, 05:10 PM.Comment
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PTC - Taxpayer Not Eligible?
The taxpayer had the employer information for 2014/early part of 2015 as she had coverage in 2014 and up until the time she was told she qualified for the PTC for 2015 in January of 2015 by the Marketplace representative. However, I agree with you regarding current year coverage information to reapply for 2016. I advised the taxpayer that in order for her to reapply correctly for 2016 she would need to know what the employer was offering for the current year, that she could not go off of the information she had in January of 2015. When she reapplied for the 2016 year she told the Marketplace there were no changes. I advised her that she had to get the info from the employer. So she basically has two issues going on. First issue is the issue I am most concerned with is "did she qualify for the 2015 PTC based on the info she provided the Marketplace representative in January of 2015." The second issue is coverage for 2016 - does she qualify based on employer's current insurance coverage information - she is supposed to be working on that; but the unfortunate thing is if she declined employer coverage during the enrollment period because she thought she qualified for the PTC, she can't go back and reinstate the employer coverage until the next enrollment period. And, if she doesn't qualify for the PTC based on new information then she will have to pay for insurance that she really can't afford. What a mess!!!Originally posted by ttbtaxes View PostComment
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I have not seen anything as to that we have a responsibility to verify/report that info client gave to Marketplace is correct. Also, I'm not seeing anyplace on tax return to report that client received PTC in error other than because of >400% FPL. If you were to determine that client should not have received PTC how/where would you indicate that on tax return?Comment
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If you fill out Form 8962, you need to know if the taxpayer qualifies for the credit:Originally posted by kathyc2 View Post
You can take the PTC for 2015 if you meet the conditions under (1) and (2) below.
For at least one month of the year, all of the following were true.
An individual in your tax family was enrolled in a qualified health plan offered through the Marketplace on the first day of the month.
That individual was not eligible for minimum essential coverage for the month, other than coverage in the individual market. An individual is generally considered eligible for minimum essential coverage for the month only if he or she was eligible for every day of the month (see Minimum essential coverage, later).
The portion of the enrollment premiums (described later) for the month for which you are responsible was paid by the due date of your tax return (not including extensions).
You are an applicable taxpayer. To be an applicable taxpayer, you must meet all of the following requirements.
For 2015, your household income is at least 100% but no more than 400% of the Federal poverty line for your family size (see the instructions for Line 4, later). However, having household income below 100% of the Federal poverty line will not disqualify you from taking the PTC if you meet certain requirements described under Household income below 100% of the Federal poverty line, later.
No one can claim you as a dependent on a tax return for 2015.
If you were married at the end of 2015, generally you must file a joint return. However, filing a separate return from your spouse will not disqualify you from being an applicable taxpayer if you meet certain requirements described under Married taxpayers, later.
The instructions further go on to define Minimum Essential Coverage and if the "Employer-sponsored coverage" was "affordable" or not (9.56%).Comment
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So, if in the opinion of the preparer the client was not eligible for PTC due to employer available coverage, how do you fill out the 8962? There is not a place on it to indicate that APTC was issued in error.Comment
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You are right, that the instructions don't specifically address what to do in this situation. To make my software correctly do things, I would enter "0" in column A.
The same idea would be the same procedure as if they were "not an applicable taxpayer".
Not an applicable taxpayer.
If you are not an applicable taxpayer because your household income is over 400% of the Federal poverty line or you are using filing status married filing separately and Exception 2—Victim of domestic abuse or spousal abandonment, earlier, does not apply to you, you cannot take the PTC. You must repay some or all of the APTC entered on line 11, column (f). To complete the rest of the form, skip lines 12 through 23, enter -0- on line 24, and enter the amount from line 11, column (f), on lines 25 and 27. Then complete lines 28 (if it applies to you) and 29. Enter the amount from line 29 on your Form 1040, line 46; Form 1040A, line 29; or Form 1040NR, line 44.Comment
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Grrr, it won't let me edit my post for some reason.
I also wanted to add that asking the Marketplace for a corrected 1095-A could be an option.Comment
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