Husbands or wives who reject an employer’s group health coverage may block their dependents’ access to Affordable Care Act exchange plan tax credits.
Officials at the Internal Revenue Service talk about dependents’ efforts to get ACA premium tax credits in a new answer to questions about how the tax credit works.
IRS officials describe a situation in which the spouse, children and other dependents of a worker can enroll in an employer’s health plan only if the worker signs up for the employer’s plan.
The plan provides coverage with what the IRS classifies as minimum value. To get employee-only coverage, the worker would pay a premium that the IRS classifies as affordable.
If the worker in that situation rejects the employer’s coverage, the spouse and children have no right to use the ACA premium tax credit to pay for exchange plan coverage, officials say.
“Because all three family members could have enrolled in … employer-sponsored coverage through employee’s enrollment, and the coverage was affordable and provided minimum value, they are not eligible for a premium tax credit,” officials say.
Drafters of the ACA created the exchange system in an effort to give consumers a way to shop for high-quality coverage on an apples-to-apples basis.
The drafters created the premium tax credit program to help exchange plan users with family income from 100 percent to 400 percent of the federal poverty level pay for the coverage.