Affordable Care Act Premium Tax Credit 1

Definitions 2 Affordable Care Act o A combination of laws passed to expand health care coverage options while lowering the cost of health care and requiring many Americans to obtain health insurance. The Marketplace o Online or over the phone 1. health coverage options 2. compare health insurance plans based 3. choose a plan; and purchase coverage.

Step 1 Intake and Interview Form Did the Taxpayer, Spouse, and all dependents have Minimum Essential Coverage (MEC)? The Taxpayer answers: o Yes: Check yes on line 61 of the 1040, move to step 6 o No: Move on to step 2 In TaxWise 3

Wait, What is MEC? 4

MEC Does Not Include 5

Step 2 Is this tax payer exempt from coverage gap fees? 6

More Exemptions 7

TaxWise Form 8965 Part 1 = Exemptions obtained through the marketplace Part 2= Everyone will answer 8

TaxWise Form 8965 Cont. Part 3 = All other exemptions. 9

Step 3 Shared Responsibility Payment The greater of: o 1% of household income above the filing threshold, or o Flat dollar amount $95 per adult, $47.5 per child Max of $285 for a family o But capped at the cost of the national average premium for a bronze level health plan available through the marketplace. 10

Filing Thresholds Filing StatusAgeMust file if gross income exceeds SingleUnder 65$10, $11,700 Head of HouseholdUnder 65$13, $14,600 Married Filing JointlyUnder 65 (both spouses)$20, (one spouse)$21, (both spouses)$22,700 Married Filing SeparatelyAny age$3,950 Qualifying Widow(er)Under 65$16, $17,550 11

Shared Responsibility Payment The greater of: o 1% of household income above the filing threshold, or o Flat dollar amount $95 per adult, $47.5 per child Max of $28 o But capped at the cost of the national average premium for a bronze level health plan available through the marketplace. Example: o Joy is single with no dependents. Joy’s household income is $30,450. Her filing threshold is $10, $30,450-10,150 = $20,300 2.$20,300 * 1% = $203 12

2014 National Average Bronze Plan Premium 13 Number of months without MEC or exemption Family Size , ,2241,8362, ,2241,8362,4483, ,6322,4483,2644,080 51,0202,0403,0604,0805,100 61,2242,4483,6724,8966,120 71,4282,8564,2845,7127,140 81,6323,2644,8966,5288,160 91,8363,6725,5087,3449, ,0404,0806,1208,16010, ,2444,4886,7328,97611, ,4484,8967,3449,79212,240

Shared Responsibility Payment The greater of: o 1% of household income above the filing threshold, or o Flat dollar amount $95 per adult, $47.5 per child Max of $28 o But capped at the cost of the national average premium for a bronze level health plan available through the marketplace. Example: o Joy is single with no dependents. o Her flat dollar fee is $95, her 1% of household income fee is $203. o Her annual national average premium for bronze level coverage for 2014 is $2,448 14

Step 4 Back to Taxpayers with Coverage Did the taxpayer purchase MEC through the marketplace? o Yes – figure the premium tax credit o No – you are done Premium Tax Credit (PTC) o Helps pay for coverage purchased through the marketplace in the form of a refundable tax credit. o Must file a joint return if married o Must be between 100%-400% of the federal poverty level o Taxpayer claiming PTC cannot be a dependent Advanced Premium Tax Credit (APTC) o When health insurance was purchased, a projection of 2014 family size and income was made and the APTC was paid in advance to the health insurance company. o This helps lower the taxpayers monthly payment 15

Federal Poverty Lines Use the taxpayers Modified adjusted gross income (MAGI) to determine eligibility 16

MAGI Modified adjusted gross income is adjusted gross income (AGI) + excluded foreign income+ nontaxable social security+ tax-exempt interest+ MAGI 17

Form 8962 in TaxWise 18

APTC If there is no advancement of the PTC or only part of the PTC is claimed in advance, the remainder can be claimed as a refund on the tax return. If excess PTC is claimed in advance, it must be paid back. 19 APTC Repayment Limits Income (as % of Fed Poverty Line) Single filing statusAll other filings statuses Less than 200%$300$ % to 299%$750$1, % to 399%$1,250$2, % and aboveNo limit

Form 8962 Cont. 20

Outline of Steps 1.Do you have full year MEC? 1.Yes – Move to step 4 2.No – Move to step 2 2.Are you exempt from purchasing coverage? 1.Yes – complete form No – Move to step 3 3.Figure the Shared Responsibility Payment 1.That is the last step for taxpayers without coverage 4.Did the taxpayer purchase MEC through the Marketplace? 1.Yes – Move to step 5 2.No – Done 5.Figure the Premium Tax Credit – Form That is the last step for taxpayers with MEC 21

For more training 22