PTC Reconciliation

[peggysioux5]

This is my first time posting to this board and appreciate any feedback other tax preparers can provide.  The ACA questionnaires that I have reviewed ask if taxpayers were eligible for health care coverage through employers.  If they answer "yes", there is another series of questions to ask to determine if they are eligible for the premium tax credit.  My question is if the taxpayer comes to the appointment with a 1095-A but they answer yes to the above question, is it required of us to determine if they were indeed eligible for the premium tax credit that they received for 2014 or are we to assume that being they received a 1095-A, that the "Marketplace" made the determination that they are eligible and our job is to just reconcile the income actually received versus the estimated income to determine if any of the PTC received needs to be paid back.

 

I have a client that had employer provided insurance for 2014 but she went on to tell me that for 2015 she received insurance through the "Marketplace" and is eligible for the PTC.  Based on her income and premiums through her employer, her insurance is considered affordable.  She also advised me that she had spoken with several different representatives in the "Marketplace" that told her they were not able to help her being she had insurance through her employer.  So.....she tried a few more times and reached the one representative that set her up with insurance.  I don't know if he was more knowledgeable or less than the other representatives.  I just want to confirm that I know what my requirements are in this instance.

 

Any input would be greatly appreciated.

[jklcpa]

From the facts you provided, this client is not eligible for the PTC in either year, and if she did receive any subsidy, she will have to pay it back for any months that employer coverage was offered and was "afforable" as long as that employer plan meets the requirements of minimum essential coverage.

 

You can't automatically assume that the 1095-A is correct because the applicant can fill out a false insurance application on the exchange and receive the subsidy, just like this person did.  Because you have knowledge of this, you must prepare the return that is complete and accurate, and keep appropriate documents and answers received from the client in your files to support your preparation. 

 

 

What I want to know is how the exchange would ever determine if a person is a smoker or not.

[Pacun]

 

What I want to know is how the exchange would ever determine if a person is a smoker or not.

 

By smelling their clothes.

[peggysioux5]

From the facts you provided, this client is not eligible for the PTC in either year, and if she did receive any subsidy, she will have to pay it back for any months that employer coverage was offered and was "afforable" as long as that employer plan meets the requirements of minimum essential coverage.

 

You can't automatically assume that the 1095-A is correct because the applicant can fill out a false insurance application on the exchange and receive the subsidy, just like this person did.  Because you have knowledge of this, you must prepare the return that is complete and accurate, and keep appropriate documents and answers received from the client in your files to support your preparation. 

 

 

What I want to know is how the exchange would ever determine if a person is a smoker or not.

But how are we, as tax preparers, determine if the employer's insurance meets the required minimum value requirements?  I know that large employers are obligated to inform their employees of this information.  But I do not think that small employers have the same requirement.  The affordability requirement is much easier for us to determine if they are eligible.  Taxpayer had insurance through her employer in 2014 so no problem for 2014.  My concern is when 2015 return needs to be filed.

[Jack from Ohio]

But how are we, as tax preparers, determine if the employer's insurance meets the required minimum value requirements?  I know that large employers are obligated to inform their employees of this information.  But I do not think that small employers have the same requirement.  The affordability requirement is much easier for us to determine if they are eligible.  Taxpayer had insurance through her employer in 2014 so no problem for 2014.  My concern is when 2015 return needs to be filed.

It is NOT our place to determine qualifications related to insurance coverage.  That is between the taxpayer, their insurance agent, their employer or the marketplace. 

[jklcpa]

But how are we, as tax preparers, determine if the employer's insurance meets the required minimum value requirements?  I know that large employers are obligated to inform their employees of this information.  But I do not think that small employers have the same requirement.  The affordability requirement is much easier for us to determine if they are eligible.  Taxpayer had insurance through her employer in 2014 so no problem for 2014.  My concern is when 2015 return needs to be filed.

 

 

 

It's not our responsibility to determine whether a policy has MEC, but we have to ask the question of the client so that we can complete the tax forms and return properly. The client will either know and be able to tell us, or they will have to make the inquiries.

[easytax]

In the original posters case, would it matter if they lied to the marketplace or not?   (moral and actual correctness taken out of question) --- because would they NOT then have to pay back all the PTC, so they would be "penalized" anyway.