ACA Marketplace & 1095-C

Failte04

Family member did periodic project work for an employer during 2024 who offered health insurance without guaranteeing any work or hours. Received a 1095-C with a few months coded 2F, the rest are 2E (not a full time employee). Enrolled in Marketplace for all 12 months of 2024. The months in issue were those that he worked ''full time'' hours in. Several months, some consecutive, with no work.

Once a full time month, even if it is 1 month, is worked during a year, employer obligated to offer health insurance. Not easy to accept given that employer is not offering full time hours, let alone any hours, yet will label you as a full time employee since you worked at least 1 full time month during the year.

How are the 1095-C months reported on form 8962? Are these months subject to the current cap on repayment of ACA credits set to expire after 2025?

Thank you.

JanaA

Hi Failte04,

It sounds like your family member has a complicated situation.

When a taxpayer is eligible for affordable private insurance (like through an employer), they generally do not qualify for the Premium Tax Credit (PTC). The IRS says the following regarding qualifications for for the PTC, "You or a tax family member enrolled in health insurance coverage through the Marketplace for at least one month of a calendar year in which the enrolled individual was NOT eligible for affordable coverage through an eligible employer-sponsored plan that provides minimum value or eligible to enroll in government health coverage."

The months reported on Form 1095-C are not directly entered on Form 8962. Instead, they will use the information from Form 1095-C to determine whether they were eligible for the Premium Tax Credit for each month. If they were offered affordable, minimum value employer coverage for a month, they would not be eligible for the PTC for that month, even if they purchased Marketplace coverage.

Since your family member had private insurance for some months, they will likely need to repay the advanced PTC they received for those months as they did not meet the qualifications for the credit they received.

Generally speaking if a taxpayer received excess advance Premium Tax Credit (APTC), there is a cap on how much they must repay, based on their household income as a percentage of the federal poverty line. However, if the taxpayer was not eligible for the PTC for certain months (due to an offer of affordable employer coverage), they would have to repay the entire excess APTC for those months, without regard to the cap.

These repayment caps were enhanced by the American Rescue Plan Act (ARPA) and extended through 2025 by the Inflation Reduction Act.

The enhanced repayment caps are scheduled to expire after 2025. For tax years 2026 and later, unless Congress extends the provision, the caps will revert to pre-ARPA levels, which are generally less generous.

Form 8962 instructions provide valuable information you can use for reference.

As this situation is complex, we encourage you to sign in to the associated account and reach out to our support team. This will provide us with secure account access which will help us to directly address their specific situation.