ACA Subsidies: Understanding the Differences Between Domestic Partnerships and Traditional Marriages

Overview

The Affordable Care Act (ACA) provides financial assistance to low- and middle-income individuals and families to help them afford health insurance. This assistance is available in the form of premium tax credits and cost-sharing reductions. The amount of assistance a person receives depends on several factors, including their income, family size, and type of health insurance plan they choose.

Domestic Partnerships vs. Traditional Marriages

For the purposes of ACA subsidies, a domestic partnership is generally defined as a legal relationship between two people who live together and share a common household, but are not married. In some states, domestic partnerships are recognized by law, while in others they are not.

Traditional marriages, on the other hand, are recognized by law as a legal union between two people.

Impact on ACA Subsidies

The ACA does not explicitly distinguish between domestic partnerships and traditional marriages when it comes to eligibility for subsidies. However, the definition of a tax household can have an impact on the amount of assistance a person receives. For the purposes of the ACA, a tax household is defined as a group of people who live together and are related by blood, marriage, or adoption.

In general, people who are married and live together are considered to be a single tax household. This means that their income and family size are combined when calculating their eligibility for ACA subsidies.

People who are in a domestic partnership but are not married may be considered to be a single tax household or a separate tax household. If they are considered to be a single tax household, their income and family size are combined when calculating their eligibility for ACA subsidies. However, if they are considered to be a separate tax household, their income and family size are not combined when calculating their eligibility for ACA subsidies.

Differences in Subsidy Amount

When all other factors are equal, people who are considered to be a single tax household will receive a higher amount of ACA subsidies than people who are considered to be a separate tax household. This is because the income and family size of people who are considered to be a single tax household are combined, which results in a lower Modified Adjusted Gross Income (MAGI). MAGI is used to calculate eligibility for ACA subsidies.

Additional Considerations

In addition to the definition of a tax household, there are other factors that can affect the amount of ACA subsidies a person receives. These factors include:

Income
Family size
Age
State of residence
Type of health insurance plan chosen
Whether or not the person is considered to be a dependent on another person’s tax return

Seek Professional Help

The ACA is a complex law, and the rules governing ACA subsidies can be difficult to understand. If you have questions about ACA subsidies or how your household size and other factors affect your eligibility, it is important to seek professional help. A licensed insurance agent can help you understand your options and maximize your ACA savings.