aca (obamacare) impact on · pdf file16. draft form 8962. 17. ... aptc $7,954 (form 1095-a)...

ACA (Obamacare)

ImpactOn Individuals

Chapter 31

Premium Tax Credit

(PTC)

2

Draft Form 8962

3

PTC Eligibility1) Purchase coverage on an

Exchange.

• In CA: “Covered California”

• 36 Other States: The Federal Exchange

• Any individual in your tax family purchases coverage on Exchange.

3-6

4

2) Have household income that falls between 100 percent and 400 percent of the federal poverty line for the family size.

5

Household Size 100% 133% 150% 200% 300% 400%

1 $11,490 $15,282 $17,235 $22,980 $34,470 $45,960

2 15,510 20,628 23,265 31,020 46,530 62,040

3 19,530 25,975 29,295 39,060 58,590 78,120

4 23,550 31,322 35,325 47,100 70,650 94,200

5 27,570 36,668 41,355 55,140 82,710 110,280

6 31,590 42,015 47,385 63,180 94,770 126,360

7 35,610 47,361 53,415 71,220 106,830 142,440

8 39,630 52,708 59,445 79,260 118,890 158,520

For each additional

person, add$4,020 $5,347 $6,030 $8,040 $12,060 $16,080

2014 FLP Levels

6

Individual Market

Medicaid/Medical

PTCHI < 400% of FPL

HI > 100% of FPL

The Exchange

7

3) Are not able to get affordable coverage through an eligible employer health plan that provides minimum value.

8

But if an individual enrolls in the employer health insurance, then

no PTC even if it is unaffordable or lacks

minimum value9

An employer-sponsored plan is “affordable” to taxpayer, spouse, and

dependents if employee cost

for self-only coverage does not exceed 9.5% of your household income.

10

4)Are not eligible for coverage through a government program, like Medicaid, Medi-Cal, Medicare, CHIP or TRICARE.

11

California Medicaid (Medi-Cal) Eligibility

HI % of FPL• Generally: 133%

• Children under 19: 261%

• Pregnant Women: 208%

12

MEC Eligibility Relief

Notice 2014-71 prevents a pregnant woman from losing eligibility for the PTC as a result of the pregnancy, merely because she is eligible for, but DOES NOT enroll in, the Medicaid or CHIP coverage:

13

No Similar ReliefFor a Child’sEligibility for

Medicaid

14

5) Cannot be claimed as a dependent by another person.

15

6) Do not file a Married Filing Separately (MFS) tax return with an exception for victims of domestic abuse and spousal abandonment who are allowed to claim the PTC using the MFS filing status.

16

Draft Form 8962

17

Three Possibilities

• PTC ($0 APTC) = Credit

• PTC > APTC = Net Credit

• APTC > PTC = Repay

18

Refund

PTC > APTC = Form 1040 Line 69

19

APTC > PTC =

Form 1040 Line 46

Repay

20

Family of Three Facts

• H and W both age 35• CA ZIP 94506• One dependent child

(age 10) • File MFJ• Purchase a bronze plan

via Covered California21

NoAdvance

PTC

22

PP

$19,530 100% of FPL

$39,060 200%

$58,590 300%

$78,120 400%MAGI

P

$4,848 PTC

$7,954 PTC

$2,460 PTC

H&W’s MAGI

Is $78,121

24

P

PP

$19,530 100% of FPL

$39,060 200%

$58,590 300%

$78,120 400%

P

$4,848 PTC

$7,954 PTC

$2,460 PTC $0 PTC $78,121 400.0005%

Contribute $1to deductible

IRA by unextended due

date of Form 1040

26

$78,121 400.0005$0 PTC

P

PP

$19,530 100% of FPL

$39,060 200%

$58,590 300%

$78,120 400%

P

$4,848 PTC

$7,954 PTC

$2,460 PTC

PTC $2,460

Two Married Adults age 64MAGI $62,041

PTC = $0

(SLCSP $20,000)28

Two Married Adults age 64MAGI $62,039

PTC = $14,000

(SLCSP $20,000)29

Back to Family of Three




New Facts:The Exchange Estimated their MAGI at $39,060

APTC$7,954

(Form 1095-A)31

P

PP

$19,530 100% of FPL

$39,060 200%

$58,590 300%

$78,120 400%

P

$4,848 PTC

$7,954 APTC

$2,460 PTC $0 PTC $78,121 400.0005%

Repay $7,954

Contribute $1to deductible IRA

PTC $2,460But….

33

PP

$19,530 100% of FPL

$39,060 200%

$58,590 300%

$78,120 400%MAGI

P

$7,954 APTC

$2,460 PTC

Repay $5,494?

No RepaymentLimit

AGI not Less Than 400%

35

PP

$19,530 100% of FPL

$39,060 200%

$58,590 300%

$78,120 400%MAGI

P

$7,954 APTC

$2,460 PTC

Repay $5,494

Contribute $2 (not $1)

to deductible IRA

PTC $2,460Plus $2,500 Limit

37

RepaymentLimit of $2,500

38

PP

$19,530 100% of FPL

$39,060 200%

$58,590 300%

$78,119 400%MAGI

P

$7,954 APTC

$2,460 PTC

Repay $5,494$2,500

$2 IRA Contribution Saves $5,454

($7,954 - $2,500)

40

What if $5,001 is Contributed to IRA reducing actual HI to

$73,120(374% of FPL)

41

Answer:

No Change from $2 Contribution

42

Repayment = $2,500

43

PTC $3,468APTC (Form 1095-A) -$7,954Excess APTC -$4,486

Repayment Limit is $2,500

Save $5,454 ($7,954 - $2,500)

Bigger PTC, but Smaller Excess APTC by Same Amount

44


APTC$7,954

(Form 1095-A)45

H&W’s MAGI

is $88,121

($10,001 over 400% of FPL)

46

P

PP

$19,530 100% of FPL

$39,060 200%

$58,590 300%

$78,120 400%

P

$4,848 PTC

$7,954 PTC

$2,460 PTC $0 PTC $88,121

Repay $7,954

Now, a $10,002 IRA contribution

reduces HI to $78,119

(slightly below400%)

48

$10,002 IRA Contribution Saves $5,454

($7,954 - $2,500)

49

PP

$19,530 100% of FPL

$39,060 200%

$58,590 300%

$78,119 400%MAGI

P

$7,954 APTC

$2,460 PTC

Repay $2,500


APTC$7,954

(Form 1095-A)51

H&W’s MAGI

is $58,590

(300% of FPL)52

P

PP

$19,530 100% of FPL

$39,060 200%

$58,590 300%

$78,120 400%

P

$4,848 PTC

$7,954 APTC

$2,460 PTC

Repay $3,106

Or $2,500

$1,500 RepaymentLimit

If AGI Less Than 300%

54

Contribute $1to deductible IRA

Save $1,000

Repayment Limited to $1,500

55

$1,500 RepaymentLimit

If AGI Less Than 300%

56

Print Out Two Tables For IRA

Planning

57

Household Size 100% 133% 150% 200% 300% 400%

1 $11,490 $15,282 $17,235 $22,980 $34,470 $45,960

2 15,510 20,628 23,265 31,020 46,530 62,040

3 19,530 25,975 29,295 39,060 58,590 78,120

4 23,550 31,322 35,325 47,100 70,650 94,200

5 27,570 36,668 41,355 55,140 82,710 110,280

6 31,590 42,015 47,385 63,180 94,770 126,360

7 35,610 47,361 53,415 71,220 106,830 142,440

8 39,630 52,708 59,445 79,260 118,890 158,520

For each additional

person, add$4,020 $5,347 $6,030 $8,040 $12,060 $16,080

2014 FPL Levels

58

Draft Form 8962

Reconcile PTC and APTC

on Form 898260

PTC = 1) SLCSP* minus

contribution amount, or

2) If less, the premium paid*

*Exchange Provides on Form 1095-A61

Family of Three Facts




• MAGI Projected in 2013 by Exchange is $58,590 (300% of FPL)

• Actual MAGI for 1014: $39,060 (200% of FPL)

63

CA ZIP 94506 For 35 Year Old Parents with

Child Age 10; AnnualLow 2nd

Lowest3rd.

Lowest

Bronze $8,376

Silver $10,140 $10,414

Purchased

Gross premium cost is driven by (1) coverage family size,

(2) age, and (3) location64

SLCSP Annual Prem. $10,414

Exchange’s ComputationOf APTC

65


Annual Contrib. Amt.* - $5,566APTC $4,848

*Tax Family HI of $58,590 x .0950 = $5,566

Exchange’s ComputationOf APTC

66

Form 1095-A

67

Form 1095-A Part III

MonthlyPremium Amount

Annual Premium Amount 68


MonthlySLCSP

For Coverage

Family

AnnualSLCSP 69


MonthlyAPTC

AnnualAPTC

70

Part 1Lines 1 through 8:

Eligibilityand

Contribution Amount71

Draft Form 8962

72

Draft Form 8962

74

Number of Exemptions =

Tax Family SizeWhich Drives

Household Income

75

Draft Form 8962

3

76

Draft Form 8962

3

Line 3 = Household Income

Household Income = Modified AGI of Taxpayer

and Dependents 77

Draft Form 8962

3Line 2a: Your Modified AGI

AGI + excluded foreign earned income + tax exempt interest +

excluded social security benefits78

3

Line 2b: Dependents Mod. AGI

79

So child’s part-time job only increases tax family HI if the

child is required to file Form 1040

80

Draft Form 8962

3$39,060 0Household Income: $39,060

81


Line 4 = 100% of FPL

82


x100% of FPL $19,530

84


x100% of FPL $19,530Line 5: HI as % of FPL 200%

85



86


x100% of FPL $19,530Line 5: HI as % of FPL 200%Is Line 5 less < 400%?

87



If Yes Continue to Line 7

88



If NO: No PTC and Pay Back APTC For ALL Individuls “in your tax family”

89



What if the % is under 100%?

90

Two Ways to Can Get PTC if Under 100% of FPL:

1)Marketplace estimated HI

between 100% and 400%

of FPL + APTC, but

Actual % is Below 100%

91

2)

“Alien lawfully present” and not Eligible

For Medicaid/Medi-Cal

92



x

93



x

“Applicable Figure” x HI on Line 594

Form 8962 Page 6Line 7 Applicable Figure

LL.0630

Higher HI % of FPL=

Higher Applicable Figure

95



x200%

.0630

96


x100% of FPL $19,530

Line 5: HI as % of FPL 200%x

200%

.0630÷ 12 = $205 $39,060 x .0630 = $2,460

98

Part 2Reconcile PTC

with APTC

99

Shared Policy or Married During Year

100

x

101

Are Forms 1095-A Monthly Amounts the Same?

x

102


All Part III Columns are filled-in with the

same amount each month

103

Form 8982 Monthly Calculation

104

Are Forms 1095-A Monthly Amounts the Samex

x

105

Are Forms 1095-A Monthly Amounts the Same

8,376

xx

106


107


8,376 10,414

xx

108


109


8,376 10,414 $2,460

xx

110


8,376 10,414 $2,460 7,954

xx

111


8,376 10,414 $2,460 7,954 7,954

xx

112


8,376 10,414 $2,460 7,954 7,954 4,848

x

113


114

PTC = $7,954APTC = $4,848

L 24 Exceeds L 25: Net PTC = $3,106

115

2014 Form 1040PTC > APTC =

Net refundable credit on Form 1040 Line 69

$3,106

116


Annual Contrib. Amt.* - $2,460PTC $7,954APTC (Form 1095-A) -$4,848Net PTC $3,106

*$39,060 x .0630 = $2,460

Summary

117

Form 1095-A

118

The Monthly SLCSP

On Form 1095-AMay Not

Be Correct Due to Coverage Family

Changes ora Move

119

The SLCSP Is Based Upon

the Coverage Family

Here, coverage family of three

121

What if our Tax Family of Three

Becomesa

Coverage Family of

One?122

Modified Facts:Same as above except, midyear,

H&W are covered by H’s employer insurance, so H&W’s Exchange

insurance is canceled July 1 but Child (C) is not covered by the

employer policy so C keeps his/her individual Marketplace Policy

Exchange Projected HI $58,590Actual HI of $39,060

123

The SLCSP Is Based Upon

the Coverage Family

of 1

124

Exchange Reports Coverage Family on

Form 1095-A, Part IIBeginning and Ending Dates

125

July through December

1) The monthly SLCSP shrinks from $868 to $177—based upon coverage family of ONE.

2) Projected tax family of three HI of $58,590 drives the monthly contribution amount: $404/mo.

126

Here, the Exchange was aware of the change because H&W’s Exchange coverage was canceled.

129


$404$868JanThruJune

JulyThruDec.

$130

MonthlyPremium

$698

MonthlySLCSP

MonthlyAPTC

$177 $0

130

What if an employee with a new 2014 job and a tax family of 3

declines “affordable” (self-only) coverage, and purchases family coverage on the exchange, in

order to get the premium credit but does not tell the Exchange or IRS on Form 8962 about the

employer coverage.

131

Will the exchange or IRS know that none of the members of the family

qualified for the APTC or the PTC?

No Form 1095-B or C for2014

132

W-2 will suggest no employer coverage

because it was declined

133

Draft Form 1095-C

134

Optional Form

In 2014

And Only ALEsIn 2015+

136

New FactsNo

AdvancePTC

137

H&W & C’s MAGI

Was Projected at $1,000,000 but they

purchased family health insurance on the

exchange

Family Net Worth $10 Mil. 138

Are they eligible for the PTC?

What will Form 1095-A Look

Like?139

Form 1095-A Part IIINeither their premiums nor

their SLCSP are based upon HI.But no APTC

140


141


142

They unexpectedly have a $950,000 IRC

sec. 1231 loss dropping

2014 MAGI to $39,060

143


Annual Contrib. Amt.* - $2,460PTC $7,954APTC (Form 1095-A) -$0Net Refundable PTC $7,954

*$39,060 x .0630 = $2,460

Form 8982 Summary

144

Part 3Repayment of Excess APTC

145

Part 4:Shared

Policy Allocation

146

One Insurance Policy:

Two Tax Families and two coverage

families (of 3 and 1)

148

Premium $15,000

Gary’s SLCSP is $12,000 (for 3)

Jim’s SLCSP is $6,000 (for 1)

149

Gary

Jim’s SSN

.67

150

Part 5:Alternate

Calculation For Year of Marriage

151

Allows the couple to use ½ their HI in pre-marriage

months

152

Rev. Proc. 2014-41 (July 25, 2014)

Self-Employed Health Insurance

Deduction and PTC

3-52

153

Guidance on and examples of the

calculation methods a taxpayer may use to resolve the circular

relationship between the IRC sec. 162(l)

deduction and the PTC. 154

Cost-sharing subsidies lower deductibles and the total out-of-pocket costs under the plan:

• HI must not exceed 250% of federal poverty level.

• Must purchase a silver plan.

155

aca (obamacare) impact on · pdf file16. draft form 8962. 17. ... aptc $7,954 (form 1095-a)...

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