Tales from PPACA World
May 15, 2015 |
By Patrick Brennan
Like a new planet, with metal levels.
Eddie works in
a thrift store, and earns just enough to put him a little above the federal poverty limit for a single taxpayer.
One of the
people for whom the Patient Protection and Affordable Care Act (PPACA) was
intended, he signed up early in 2014, and received a $680 per month “silver”
plan for which he paid only $45 out of pocket.
On Dec. 27,
Eddie married Jan, a disabled widow he met at work.
Jan is a few
years older than Eddie, collects Social Security, and is covered by Medicare.
As part of the process of starting his new life, and encouraged by the sense of
economic security provided by affordable health insurance, late in November
Eddie negotiated the settlement of an outstanding credit obligation. He started
2015 a very happy man.
Then he tried
to file his taxes.
First, he
discovered that the “write-off” portion of his credit settlement was counted as
“income,” although he had actually received none. According to PPACA, Eddie's
increased adjusted gross income (AGI) meant he would have to pay “back” (a term
Eddie could not understand, since he had never received that money, either)
$1,100 of premium tax credits advanced on his behalf.
The issue that
hurt the most, however, was Jan's Social Security benefit, which totaled more
than $18,000. Although that money is not subject to federal income tax, PPACA
counts it as income in calculating premium tax credit eligibility. Added to
everything else, it just about eliminated all of Eddie's credits.
It took several
trips through the instructions for Form 8962 and IRS Publication 974 to
discover and implement the “Alternative Calculation for Year of Marriage,”
which effectively nullified the penalty for 2014.
However, Eddie
still had to return $1,100 of his 2014 advance premium tax credit, and now pays
and additional $100 per month for his insurance plan.
That's the
penalty for marrying a Social Security beneficiary on Medicare.
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