NEW YORK (MainStreet) The Affordable Care Act (ACA) has had a rough ride so far, and now it remains to be seen if it will derail wedding plans for some couples or drive married couples down the road to divorce.
"Some individuals with similar incomes may lose eligibility for tax credits if they marry," says Brian Haile, senior vice president for health policy at Jackson Hewitt Tax Service Inc.
The amount in ACA tax credits Marketplace consumers may qualify for is based on household income. Singles who qualify for tax credits when they sign up will no longer qualify for the subsidy after getting married, if the couple's combined income puts them over 400% of the federal poverty line, which peaks at $62,040 for a family of two for 2013.
"For example, two people who each have an income of $40,000 may be eligible for the premium assistance tax credits under the ACA but only if they remain single," Haile says. "If they marry, then they would not qualify for the credits because their income would be over the eligibility limit for a household of two," he says.These couples also will be required to pay back some of the credit. The amount of money they'll have to pay back "will depend upon how far over the line they go," Gregory A. Zbylut, a CPA at Zbylut Law Office says.
Further, marrying someone who has an employer-sponsored health insurance may result in a loss of ACA tax credits.
"[T]he final rule on premium tax credit eligibility states that individuals who have access to 'affordable' employer-sponsored coverage are ineligible for premium tax credits," Haile says.
If the premiums cost the covered employee less than 9.5% of the couple's modified adjusted gross income, then the federal government considers them affordable and the new spouse will lose out on any tax credits he or she qualified for before getting married, even if the insurance premium offered by the spouse's employer is sky high, he says. This situation applies to all married couples, not just newlyweds, and it is commonly referred to as the "family glitch," Haile says.