Impact of Marriage on ACA Insurance: Eligibility and Premium Tax Credits

Getting married can trigger significant changes in your eligibility and premium tax credits for health insurance under the Affordable Care Act (ACA). Understanding these changes can help you make informed decisions and avoid unexpected tax consequences.

Eligibility for Premium Tax Credits (PTC)

The PTC is a financial assistance program that helps low- and moderate-income individuals and families afford health insurance premiums. To qualify for the PTC, you must meet certain income and household size requirements.

When you get married, your household income and size increase. This can affect your eligibility for the PTC. If your combined household income exceeds the income eligibility threshold, you may no longer qualify for the PTC or may receive a reduced amount.

Calculating Income for PTC Eligibility

Even if you file your taxes separately from your spouse, the IRS considers household income when calculating your PTC eligibility. This means you must include your spouse’s income in your PTC application, even if they are not enrolling in health insurance through the Marketplace.

Repayment of PTC

If you receive PTC and your household income increases significantly after getting married, you may be required to repay a portion of the PTC you received. This is because the PTC is based on your projected income for the year. If your actual income exceeds the projected income, you may have received more PTC than you were entitled to.

Alternative Calculation for Year of Marriage

If you got married mid-year, you may be eligible for an alternative calculation of your PTC for that year. This calculation allows you to use half your joint income for the year and consider your household size as one (assuming no dependents). This can result in a higher PTC amount than if your income was averaged over the entire year.

Implications of Filing Taxes Separately

Filing taxes separately from your spouse can impact your PTC eligibility. If you file Married Filing Separately (MFS), you are ineligible for the PTC unless you qualify for Injured Spouse relief. This means you would have to repay all the PTC you received for the year.

Seek Professional Help

Navigating the impact of marriage on ACA insurance can be complex. It’s recommended to seek the assistance of a licensed insurance agent or tax professional to ensure you understand your options and avoid any potential tax penalties.