Do we file an amended tax return because of this Medicare?

Question

My wife turned 65 in January 2023. I am younger than her.

In December 2022, we called SSA to get her signed up for Medicare. She would not have qualified if she were single because she had not worked enough in her life. On the phone, the SSA employee told us she would not be eligible for Medicare until I was receiving it (October 2024).

We accepted this determination and we both got Marketplace health insurance for 2023, receiving significant Advanced Premium Tax Credits (APTC).

Earlier this year 2024, believing the SSA rep we spoke with in 12/22 might have been wrong, we phoned SSA again and they determined the rep we spoke with in 12/22 was wrong and my wife WAS indeed eligible for Medicare. So this month, May 2024, she got a Medicare card that says her Part A coverage started on January 1, 2023 and Part B started on February 1, 2024.

Researching the implications of this, it seems we may have to pay back $700 of the APTC we got in 2023.

Is this correct? Do we file an amended tax return because of this? We were misinformed by the SSA, it wasn't our fault, but I think it might still be our problem.

KristineS · Accepted Answer

Hi Incilius_nebulifer,

We appreciate you writing in with your question.

It is possible there may be some APTC you will need to pay back, yes.

The markeplace insurance you started in 2023 will end up being reported on Form 1095-A. You should have received a copy of the form in early 2024 to report on your 2023 tax return. If you did not, you can log into your account at www.healthcare.gov to get a PDF copy and use that in the preparation of your 2023 tax return.

Since it sounds like you already filed your original return, yes, you will need to create an amended return to include Form 1095-A.

Entering information from Form 1095-A in our software will reconcile the APTC to show if you have any amount to pay back.

Henry · Accepted Answer

Hi Incilius_nebulifer, I'm sorry to hear that you were given incorrect information and are now having to deal with the negative repercussions. I hope that I can help to clarify things so that you know what to expect and can determine how to proceed.

The IRS clarifies the PTC rules in IRS Publication 974. On pg 9 it discusses how government-sponsored programs like Medicare Part A coverage affect PTC eligibility. It explains there that you generally cannot get the PTC for your health insurance coverage if you are eligible for government-sponsored minimal essential coverage.

If you can be covered under a government-sponsored program, you must complete the requirements necessary to receive benefits by the last day of the third full calendar month following the event that establishes eligibility (for example, becoming eligible for Medicare when you turn 65). In your wife's case, it sounds like she turned 65 in January of 2023, so the application for Medicare coverage would probably need to have been completed by April 30, 2023.

The IRS says that if you don't complete the necessary requirements in time, you will lose the PTC for your coverage beginning with the first day of the fourth calendar month following the event that makes you eligible for the government coverage. That would likely mean that your wife would be considered eligible for government-sponsored coverage beginning on May 1. Thus, from the information in Publication 974, it sounds like she may get the PTC for her coverage for January through April of 2023 but not for May through December.

If you need to amend your 2023 tax return to report the excess APTC that was paid for your wife, you can do that by signing in to your 2023 account, clicking on ACCOUNT near the top right of the screen, and selecting "Amend Tax Return." The software will walk you through the amendment process from there.

When you are ready to edit your PTC information, please select Deductions/Credits > Marketplace Health Insurance (1095-A) from the menu. Continue through those screens and choose to edit your Form 1095-A information. On the 'Health Insurance Marketplace Statement Information (Form 1095-A)' screen you will be asked, "Does this Form 1095-A include coverage for January through December with no changes in monthly amounts shown on Form 1095-A Lines 21-32 in columns A, B and C?" You should answer NO there if you had a change in coverage/eligibility that you didn't notify the Marketplace about.

On the following screen, you are prompted to enter your health insurance info from Form 1095-A. For the months that your wife was eligible to obtain minimum essential coverage outside the Marketplace, you need to adjust your SLCSP Premium amounts. Also, if there are any months for which you didn't receive an APTC, the SLCSP Premium amount shown on your Form 1095-A for those months may not be correct either.

You can use the tool at this federal Marketplace link to obtain the applicable SLCSP premium for each month based on your coverage family size. Since your coverage family went from two people to one during the year, you'll need to calculate two different applicable SLCSP amounts for 2023. Once you determine the applicable SLCSP premium for the coverage family of one (only you), you can enter that amount in column B for May through December on the 'Enter your health insurance info from Form 1095-A' screen. You can enter the SLCSP premium amount for the coverage family of two (you and your wife) in column B for January through April.

When you have the correct SLCSP premium amounts reported for each month, the software will be able to calculate how much PTC you actually qualified for throughout the year. If you received too much APTC, then you may need to pay back the excess amount. On the other hand, if you didn't receive enough APTC, then you can claim a credit for the remaining PTC for which you qualify and receive a refund from the IRS when you file the amended tax return.