Obamacare part year coverage/advance PTC

[richie]

Client enrolled in obamacare while unemployed.  Client was unemployed first 4 months of year and only received Unemployment Compensation.  She worked as an employee for the remainder of the year.  Her income for the entire year puts her at over 400% of poverty level and ProSeries calculates Excess Advance Payment of PTC at $1,740.  It was on target for the period of unemployment and she didn't receive advance PTC once she was employed.  

Is there any way to make an adjustment in ProSeries to eliminate or at least reduce the Excess Advance PTC?  Thank you for your help.

Richard

[abctax55]

Nope, it's income for the entire year that the 'cliff' is based on.  There's no proration by month.  Once her income increased, she should have notified the Exchange.  Then her subsidy would have been less, & she wouldn't 'owe' so much now.   BUT she would have paid more each month.  Chicken v egg scenario.... 

[richie]

Thank you abctax55,

She did terminate obamacare after 4th month and had coverage through an employee plan with her new job for the remainder of the year.

As information - her monthly enrollment premium was $869.39 (3,477); monthly advance $849.00 (3,396).  Form 8962 calculates the maximum monthly assist at $414 (1,656) resulting in overpayment $1,740.

Am I in the same boat or is there some way of at least reducing the payback amount?

Thanks again.

Richard

[abctax55]

Not that I'm aware of... paging @TaxGuyBill  for confirmation.   Bill's our resident expert.

[BobKamman]

She should have seen it coming once she found a job, but you can't really blame her or thousands of other people (including me) for not fully understanding how the program works.  

A Tax Court decision last week illustrated one of the anomalies of the formula for determining who gets the credit.  "George’s and Daniele’s MAGI was $91K. Their APTC was $23K. So being $8K over the limit gets them a $23K deficiency."  Blogged at

https://taishofflaw.com/2023/04/06/eightll-get-ya-23/

[abctax55 · Accepted solution]

The only 'option' is to figure out a way to reduce her income.  At this stage, an IRA (if she qualifies) and/or (maybe) an HSA contribution.    Maybe that would get her below the 401%

[richie]

Thank you abctax55,

I was afraid that was the answer - just thought maybe another pair of eyes might see something I missed.

Richard

[abctax55]

YVW.... backup is good in early April when "the forest is blocked by the trees".  Good luck the next 10 days.