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I have not seen this situation before....


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Taxpayer and Spouse had all year coverage through Taxpayer employer.  Spouse's daughter and granddaughter live with taxpayer and spouse.  Daughter and granddaughter had full year coverage through the exchange at zero dollars (medicaid).  Daughter and granddaughter lived with them all year.

 

Tax family all had coverage all year.  Check box 61.  Use daughter and granddaughter as dependents.  No more to be done however a 1095-A will be issued for daughter and granddaughter.  Daughter has no filing requirement.  EIC not an issue.

 

Will taxpayer's income affect healthcare benefits for daughter later on?  I just don't understand how it will all work.

 

Tell me what you think.

 

Thanks

Karen 

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Was Medicaid through the exchange or do they just qualify for Medicaid?

 

If 1095-A, would you not have to reconcile using the 8692 form whether they receive PTC or not (as income may be looked at in the Market Place)? If they are dependents of taxpayer, would not the household income come into play for the Market Place?

 

I do not know your Medicaid rules as to who qualifies and such and what incomes can/should be used for the Medicaid benefit.

 

This is an excellent question as ACA and Medicaid rules for use might be different.     Hope there is much more input from forum members and if any government regulations, etc. are known.

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Disclaimer: I don't have any clients on Medicaid, but I think your client, the parents, might have a problem.  Here are my thoughts on this. According to the instructions for form 8962, the person or couple taking the dependent exemption for someone in their "tax family" are the ones that must reconcile any amounts received as advanced premium tax credit, but because the daughter & granddaughter are not required to file a return, the daughter's and granddaughter's MAGI isn't included in the calcs for reconciling the APTC.

 

Because your question is an interesting one, I did some poking around on the internet and found a site for WA state medicaid expansion. One of the points states that the new methodology for determining Medicaid eligibility is based on MAGI and also that household composition mirrors federal tax filing rules in most situations.   This is the site that I was looking at; see item #3 on this page:  http://www.hca.wa.gov/hcr/me/Pages/faq.aspx

 

Please don't take this as any kind of final answer to rely on because I really don't know if this is correct, or if the site I was looking at is even the program in your state that the daughter and granddaughter supposedly qualified under, but reading some of that, I'm beginning to wonder if they truly were Medicaid eligible.

 

I hope we have some others from WA that will weigh in, or that you'll post how you end up handling this because I'd like to hear what the final answer is.

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Daughter and her child will no longer get free health insurance. Not only that, this is the time to show what you made in 2014 and since your parents supported you, they will have to return some money to the exchange.

Edited by Pacun
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The ending comment brings up a question --- KAREN LEE -- you mentioned a 1095-A would be received; is this from the client or just a possibility?  As stated below, Medicaid MAY NOT be issuing 1095-A's for 2014, thus no 8962 may be needed to reconcile AND daughter and child were covered (Medicaid) so box 61 will be checked as you stated.

 

If this is the case and (I misunderstood the question, thus my answer before) and your question is strictly about daughter and her child's insurance, they will need to contact Medicaid and ask about "requirements" for household income (whether parents money enters in or just daughter and her child's income counts) to determine if Medicaid will cover.    Most states will allow child coverage even with high dollar households but I do not know for sure in your state and know nothing on "daughters" Medicaid requirement.

 

I have had some families NOT take otherwise "allowed" relatives for tax purposes, because when doing so, the full family income was factored into the state benefit allowances and a lot was lost (to the determent of the relative), so the family gave up the "tax" benefit in favor of the relative having better program availability and thus better overall cared for.

 

 

Following are two answers from "other board" and how I stated question:

 

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Taxpayer and Spouse had all year coverage through Taxpayer employer. Spouse's daughter and granddaughter live with taxpayer and spouse. Daughter and granddaughter had full year coverage through the exchange at zero dollars (medicaid). Daughter and granddaughter lived with them all year.

Tax family all had coverage all year. Check box 61. Use daughter and granddaughter as dependents. No more to be done however a 1095-A will be issued for daughter and granddaughter. Daughter has no filing requirement. EIC not an issue.

Will taxpayer's income affect healthcare benefits for daughter later on?

Would you not have to reconcile using the 8692 form whether they receive PTC or not (as income may be looked at in the Market Place)? If they are dependents of taxpayer, would not the household income come into play for the Market Place?

I do not know your Medicaid rules as to who qualifies and such and what incomes can/should be used for the Medicaid benefit.

Any thoughts or input would be appreciated.

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I thought on this one for a while. You will not get an easy answer here as Medicaid is state specific, and you would need to know how they calculated for medicaid and what the income limitations for that state. I would start with last years return and see if the were dependents on the return for 2013 or 2012, and then go from there. If the parents claimed them and they still received medicaid then the parents income was not a factor in determining benefits. I hoped that this helped. BTW, medicaid usually has a 3-5 yr look back when determining benefits.

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My understanding is that the 1095-A will only be issued if coverage is purchased through the Marketplace. I don't believe Medicaid recipients will receive any 1095 this year. Next year I believe they will receive 1095-B.

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