Special Situations Related To Eligibility
Post-Employment Coverage (COBRA)
A former employee (including a retiree), or an individual related to a former employee, who may enroll in eligible employer-sponsored coverage or in continuation coverage required under Federal law, or a State law that provides comparable continuation coverage, is eligible for minimum essential coverage under this coverage only for months that the former employee or related individual is enrolled in the coverage (Reg 1.36B2(c)(3)(iv)). Thus, if a former employee does not take the COBRA coverage and is otherwise qualified, he or she would be eligible for the PTC.
Individuals Who Are Incarcerated Or Not Lawfully Present
Individuals who are not lawfully present in the United States or are incarcerated (other than pending disposition of charges, for example, awaiting trial) are not eligible to enroll in a qualified health plan through a Marketplace. However, these individuals may be applicable taxpayers and claim the PTC for the coverage of an individual in their tax family who is eligible to enroll in a qualified health plan.
Married Taxpayers
A taxpayer who is married generally must file a joint return with their spouse to take the PTC. However, the taxpayer is treated as unmarried for federal income tax purposes if the taxpayer is divorced or legally separated according to state law under a decree of divorce or separate maintenance.
Married Taxpayer Filing As Head Of Household
Where a married taxpayer qualifies to file as head of household, they can take the PTC if they otherwise qualify. A married taxpayer can file as head of household if he or she: (a) lived apart from their spouse at least the last six months of the year and (b) paid more than one-half of the cost of maintaining as his or her home a household which is the principal place of abode for more than one-half the year of a child, stepchild or eligible foster child for whom the taxpayer may claim a dependency exemption. (Nondependent child qualifies only if the taxpayer gave written consent to allow the dependency to the non-custodial parent, or the non-custodial parent has the right to claim the dependency under a pre-’85 divorce agreement).
Victims of Domestic Abuse or Spousal Abandonment
If the taxpayer is a victim of domestic abuse or spousal abandonment, they can take the PTC on a married filing separately return if they meet all of the following (Regs 1.36B-2(b)(2)(ii))
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They are living apart from their spouse at the time they file their tax return.
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They are unable to file a joint return because they are a victim of domestic abuse or spousal abandonment.
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They certify on their return that they meet the criteria for claiming the PTC using the married filing separate filing status.
A taxpayer is considered a victim of spousal abandonment for a tax year if, taking into account all facts and circumstances, the taxpayer is unable to locate his or her spouse after reasonable diligence. (Reg. § 1.36B-2(b)(2)(iv))
The taxpayer may claim this exception to the requirement that married taxpayers must file jointly to claim the PTC for no more than three consecutive taxable years. (Reg. § 1.36B-2(b)(2)(v))
Domestic abuse includes physical, psychological, sexual, or emotional abuse, including efforts to control, isolate, humiliate, and intimidate, or to undermine the victim's ability to reason independently. All the facts and
circumstances are considered in determining whether an individual is abused, including the effects of alcohol or drug abuse by the victim’s spouse. Depending on the facts and circumstances, abuse of the victim’s child or other family member living in the household may constitute abuse of the victim. A taxpayer is a victim of spousal abandonment for a tax year if, taking into account all facts and circumstances, the taxpayer is unable to locate his or her spouse after reasonable diligence.
Taxpayers self-certify they qualify for an exception by checking the “Relief” box in the top right-hand corner of Form 8962. No documentation should be attached to the return, but it should be kept with the taxpayer’s tax return documents. For examples of what documentation to keep, see Pub. 974.
Married Filing Separately
Generally, a married taxpayer filing separately (MFS) who does not qualify as a victim of domestic abuse or spousal abandonment cannot take the premium tax credit (PTC) and thus must repay all advance premium tax credit (APTC) received (IRC Sec 36B(c)(1)(C)). However, when an individual has obtained insurance through the marketplace, received APTC, and subsequently files as MFS, the amount of APTC that must be paid back may be limited based on the taxpayer’s household income relative to the federal poverty level (IRC Sec 36B(f)(2)(B)(i)). See page 12.02.12 for maximum paybacks based upon federal poverty level.
This exception effectively allows MFS taxpayers to obtain some amount of the PTC when they have obtained insurance through the marketplace and are not offered affordable insurance by their employers. In addition, MFS spouses are splitting their incomes by filing separately, thus reducing their individual household incomes and potentially dropping them into a lower poverty level. This, in turn, can reduce the amount of APTC they have to pay back.