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PTC (repayment)


ILLMAS

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Before I make the dreaded call to the TP, if one had a very low income during half of the year and qualified you for PTC, TP gets a well paying job that provides health insurance, PTC stops, yearly income is kind of high, is this a cause for PTC phaseout?  Or would the TP still qualify for half of the year only at the lower income and there is something I need to click on ATX to calculate for half of the year?

Thanks

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It is a full year calculation.   This is one of the pitfalls (critical oversights/flaws/stupid law crap) of the ACA.   You have to estimate your future income, and the penalty for not knowing the future at the time you sign up can be financially devastating to the taxpayer.   I am not being critical of the politics, just the actual law as it is written.   It is unfair to the TP to make their estimate of income the determining factor in the amount of a tax credit that will need to be repaid if the estimate is incorrect.

Getting off my soapbox now.  

Tom
Modesto, CA

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55 minutes ago, BulldogTom said:

It is a full year calculation.   This is one of the pitfalls (critical oversights/flaws/stupid law crap) of the ACA.   You have to estimate your future income, and the penalty for not knowing the future at the time you sign up can be financially devastating to the taxpayer.   I am not being critical of the politics, just the actual law as it is written.   It is unfair to the TP to make their estimate of income the determining factor in the amount of a tax credit that will need to be repaid if the estimate is incorrect.

Getting off my soapbox now.  

Tom
Modesto, CA

I hate when that happens.

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As soon as the tax payer got a better paying job, he should have informed the exchange and let them know that he was out of range and therefor he didn't need any help paying full price. He has to return some or all the money that was sent to the insurance company by the exchange.

I just had a client who was paying $800 through his employer, he went to the exchange and now he is paying $600 and the exchange another $600. He is married and files jointly and they make about $60K. I think they don't qualify for the exchange but they claim they took their taxes (they always make $60K) and they told them that the exchange was going to help them with $600 every month.

She has $40K on a 401k and she separated from service. They want that money now and even with the $60K in W-2 they would have to return the money and now we are talking about $100K.

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4 hours ago, Abby Normal said:

But if their income for the year was less than 400% of poverty level, APTC repayment is capped. I've seen this work out well for some, and 2018 could be a banner year for this.

I agree in a general sense, but in the case Pacun described, he made it sound like the TP didn't lose employer coverage, but rather the TP chose to purchase on the Marketplace and is receiving the APTC. If this is the case and the TP was still eligible for the employer-sponsored plan, then unless the $800 cost to TP of employer's plan is unafforable, then wouldn't this person's repayment of APTC be the full amount without limitation, unless he can show that the $800 employer plan's premium is unafforable?   We can't determine afforability because it wasn't stated whether the $800 monthly premium covered only the employee or if it included spouse or family also.

Obviously, the extra $40K of 401K distribution to the wife, if I understood that correctly, changes the entire repayment scenario since there is no way that the couple's income wouldn't exceed the 400% FPL.

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