ACA Excess Advance Premium Credit Repayment - Sale of Business Assets

[midwesttaxinc]

Client and husband operated a Schedule C business until July 2019. Both turned 65 in 2019 and went on Medicare, but had ACA exchange policy with premium credits calculated for part of the year. When business assets were sold and business closed in 2019, no adjustments to income were made for the health insurance premium. Now with return completed, there is a substantial premium credit repayment. Taxpayers were advised that there is a "work around" because the sale of business property was a "one time deal" OR that there is an option for requesting a recalculation by IRS. I have found zero evidence of either of these options - but maybe someone else knows more than I do about that.

Any suggestions anyone?

THANKS!

[George4Tacks]

There is an appeal for the higher medicare premium for a life changing event. That may be what the client is confusing with the repayment that they are experiencing.
https://www.hhs.gov/about/agencies/omha/the-appeals-process/part-b-premium-appeals/index.html

[TaxGuyBill · Accepted solution]

As George mentioned, there is not an exception for repaying the Advance Premium Tax Credit.

1. The first thing to try is to see if contributing to retirement accounts would lower income below 400% of the Federal Poverty Level (which will limit the amount of the repayment).
2. If that doesn't work, see if filing as Married Filing Separately will help anything (it may lower one or both spouses to under 400%).
3. If that doesn't work, try combining #1 and #2.

[qbteachmt]

"Taxpayers were advised that there is a "work around" because the sale of business property was a "one time deal" OR that there is an option for requesting a recalculation by IRS."

This Advisor is confusing IRMAA and ACA. Which means that person should not be listened to for anything, because that is a basic understanding you should have before giving anyone advice. And whoever helped them submit for the Credit obviously did not guide them for ACA "life changing events" follow up.

[Just-Lisa-Now-]

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@George4Tacks wrote:
There is an appeal for the higher medicare premium for a life changing event. That may be what the client is confusing with the repayment that they are experiencing.
https://www.hhs.gov/about/agencies/omha/the-appeals-process/part-b-premium-appeals/index.html

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Ive had 2 different clients try to appeal this medicare increase that happened due to selling a rental property and both failed.

[sjrcpa]

I tried it once and failed. Client sold his home in Northern VA where he had lived for over 50 years. There was a very large taxable capital gain, a once in a lifetime event.. No dice.

[qbteachmt]

Oooh, interesting. The local Aging Services office told me that a person making a taxable IRA conversion to Roth should easily be able to submit for forgiveness if that puts them into IRMAA.

[George4Tacks]

I was successful when I sold my practice and went onto SS/Medicare that year. Like many things, it can depend on how it presented and who reads the story. I was honestly very surprised that my story was a prize winner.

[midwesttaxinc]

Yep, same here. Mine failed as well, but as I told the clients, it all depends on which person gets your paperwork and how they are feeling that day. Sometimes, it just is what it is and there is no fixing the problem AFTER the fact. 😉

[TaxGuyBill]

In regards to the Medicare adjustment, selling a house is NOT one of the situations that qualify for it.  Sure, it is possible you could get someone to process it incorrectly, but a large increase of income is NOT a qualifying event.   A loss of job income (selling the practice for George) is a qualifying event.  

From the link above:

There are 7 qualifying life-changing events:

• Death of spouse
• Marriage
• Divorce or annulment
• Work reduction
• Work stoppage
• Loss of income from income producing property
• Loss or reduction of certain kinds of pension income

[sjrcpa]

No wonder it didn't work. 😮 This was years ago. I don't even know if that list existed then.

[George4Tacks]

I think I convinced them that selling my primary business and retiring was a Work Reduction and a Work Stoppage and a Loss of income from income producing property.
This is how I made up for my first try at freshman English in college. The one paper I should have kept came back this comment by the professor "Vast improvement over last effort. D-" Yes, I got an F in that class.