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Covered California and Obamacare related questions from consumers, employers and agents are answered by Phil Daigle with the best information available at the time. Archived entries may no longer be accurate as the Covered California and Obamacare knowledge-base is evolving quickly. TO REQUEST A PERSONAL RESPONSE INCLUDE EMAIL ADDRESS.


Separate Returns = No Subsidy?

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Question: What if a married couple is filing separately? Based on our individual incomes, my husband would qualify for Medi-Cal and I should be eligible for a subsidy. But the exchange told me that in order to receive premium assistance spouses are required to file a joint income tax return. Is that true?

Answer: Yes. The law says if you file as married filing separately, you will not be eligible for any premium subsidy at all, regardless of income. Only domestic abuse, abandonment, or other special circumstances (pending divorce?) may be exempted from the requirement to file a joint return in order to qualify for the premium subsidy. Reference TD 9590, IRS

11 Comments

Thanks Steve Shore for providing these valuable links for those interested IN:

IN-HOME SUPPORTIVE SERVICES AND RELATED TOPICS

Here’s the links I have for IHSS

http://www.cdss.ca.gov/cdssweb/PG63.htm

https://ca.db101.org/ca/programs/healthcoverage/medical/ihss/program2b.htm

https://www.caring.com/articles/payment-for-family-caregiver

http://dpss.lacounty.gov/wps/portal/dpss/main/programs-and-services/in-home-supportive-services/

https://taxcredits.healthreformquotes.com/quotes-subsidy-tax-credits/magi-modified-adjusted-gross-income-line-37/magi-faqs/caregiver-income/ihss-annuity/

https://www.irs.gov/irb/2014-4_IRB/ar06.html#d0e474

https://www.irs.gov/irb/2014-4_IRB/ar06.html

I am disabled and wanting to receive ihss benefits, but I have to qualify for medical-Cal to even begin the ihss process. My problem there is im married and the requirements to be eligible for medi-Cal is we basically have to make nothing, have nothing, and be going nowhere! My husband isn’t a millionaire by any means, far from it but he makes more than 2k a month which is the requirement to receive Medi-Cal. So that means even though I should receive ihss benefits no problem, I cannot because of this whole medi-cal crap! I’m wondering is there anyway I can get ihss without being on Medi-Cal? And if so, how?!? I’m desperate for some help with my everyday life now that my husband travels for work and is no longer home every night to help me with my everyday needs.

There are all sorts of “penalties” invoked by filing separate tax returns, and the inability to obtain premium tax credits is just one of them. While there may be legal or other reasons for married persons to file income taxes separately, a professional tax adviser may be of value in determining if your situation falls under one of the exceptions.

I think this is a terrible law. Where are the tax benefits for creating less problems in the world? I have outrageous student loans and due to the fact that I incurred this debt to hopefully earn a better income (and prior to being married and not putting this burden on my husband)…I feel I am not penalized for filing separately! Where are the benefits in becoming educated in America?

Thank you so much for using the actual citation on the IRS website

My husband and I filed for divorce and have lived apart for two years. We haven’t finalized the divorce but were wanting to file our taxes separately. Can we do so and when I apply for coverage on Covered California, can I used only my income even though we’re still married? Also, can I include my daughters on the application?

The IRS just this week posted a new rule that spouses living apart as the result of domestic violence can file separately and claim the tax credits, too. Too little, too late.

I simply wanted to say thanks once more. I do not know the things I might have handled without the points documented by you concerning this concern. This was a very scary difficulty in my circumstances, nevertheless seeing the very specialised manner you solved the issue forced me to jump over contentment. I am just thankful for this guidance and then hope you really know what a powerful job that you are undertaking instructing the rest through your web site. Most probably you haven’t come across any of us.

Here’s why the information from Covered CA, if repeated accurately above, is not necessarily reliable.

“1. Legally Separated”

Divorced and legally separated are two very different things. Legally separated means a divorce action is pending before the court (a complaint has been filed for adjudication). Divorced means a final decree has been issued. Under federal law, premium tax credits are NOT available to “legally separated” persons unless they have lived apart for at least 12 consecutive months.

“2. Married but living apart” is used only as the criteria to qualify as head of household when a dependent child may be claimed for tax filing purposes. If the taxpayer meets ALL of the listed criteria under this test, then premium tax credits may be available, based on MAGI.

The state has no authority to waive federal rules (IRS/IRC) governing eligibility for premium tax credits. Unless a person meets the federal requirements, nothing anyone from Covered CA says to the contrary means more than the air that was consumed to breathe those words.

I have a client that is married but files separately from her husband. Here is the response I got from a higher-up at Covered California.

The general rule is that married couples must file jointly to be eligible for tax credits. However there are two situations where an individual may not be considered married under the Affordable Care Act, see below:

  1. Legally Separated: individuals who are legally separated under decree of divorce or of separate maintenance are not considered married and can individually be eligible for tax credits, depending on their separate household incomes.

  2. Married but living apart: If an individual lives apart from his/her spouse and meets certain tests, that individual may be able to file as head of household and may be eligible for tax credits, even if s/he is not divorced or legally separated. To qualify for head of household status on the last day of the year, you must meet all of the following: a. File a separate return; b. Paid more than half the cost of keeping up your home for the tax year; c. The spouse did not live in the home during the last 6 months of the tax year; d. Your home was the main home of your child, stepchild, or foster child for more than half the year; AND e. You must be able to claim an exemption for the child.

You could always get divorced and live in sin with each other, as roommates “with benefits”. How wonderful life is now that the Defense of Marriage Act is dead, too.

This is a game that married Social Security beneficiaries once had to play, too, in order to maximize their retirement income benefits.

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