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Why Do I Need to File Taxes with My Partner to Qualify for Obamacare?

Having health insurance is a growing need in today’s age of CORONA virus and other flu-like variants. We want to carry some type of coverage to see a doctor and get prescriptions to get well as soon as we can. This feeling is amplified when we have others to consider, like a spouse and children under our care. When our job doesn’t provide the coverage we need, the Marketplace is, in most cases, our only option. But to receive benefits, we need to meet certain qualifications. One of those is marital and financial status. You may need to file taxes with your partner to qualify for Obamacare.

Who Can Apply for Obamacare Health Insurance in Texas?

The short of it is if you are an adult and do not have access to health insurance through an employer or a family member who has credible coverage, the Marketplace Exchange is your best bet. You can elect to include your partner or to exclude them on your health insurance policy, but if they are living with you, they must be included on the application and, in some cases, it is required under the law. However, having them on your policy can give you added benefits.

When you begin to talk about including a spouse for premium tax credits, the situation changes. Obamacare allows these subsidies depending on your income and household size. This will help with the cost of your health insurance in Austin. It revolves around the Federal Poverty Level (FPL), determined by your tax status. As a couple, you must file jointly to qualify.

There are several advantages to applying as married instead of filing single or, in this case, married filing separately. When you apply as married jointly, you receive additional tax benefits. But to receive them, you must:

  • Have an income that is at least equal to the Federal Poverty Level (FPL). Your previous year’s numbers will determine this
    • Not be able to receive health insurance in Texas through a spouse’s employer
    • Not have access to coverage through government assistance such as Medicaid, CHIP, or Medicare.
    • Have legal U.S. residency.

Meeting all these conditions, you and your spouse can then file jointly and claim the premium tax credit, thus lowering your insurance premium. But are there tax ramifications to filing together?

This would depend on how much you make and your plan costs. At the end of the year, you reconcile your plan. When you file your taxes at the end of the year, if you overpaid for your plan, you receive your money back with your tax refund. However, if you did not pay enough, you will be required to pay the difference at that time.

How Does Obamacare Use My Taxes to Qualify for Coverage?

The Marketplace uses what is called your Modified Adjusted Gross Income (MAGI). While this number is not on any tax form, it can be used to determine how much assistance you will receive from the government for insurance purposes. It will help qualify you for programs such as Medicaid, CHIP (Child Health Insurance Program), and eligibility for premium tax credits. The primary difference from your Adjusted Gross Income on your tax form is that it includes non-typical items such as: untaxed foreign income, non-taxable Social Security benefits, and tax-exempt interest.

Let’s discuss how this works:

Premium Tax Credit:when your income or household situation changes, your premium can change. Unfortunately, your family situation can change from month to month. Contract work that fluctuates or even a layoff can affect your financial situation and your insurance status. This needs to be reconciled with your health insurance at the end of the year. Perhaps you had a family member move in with you or one move out. These, too, are situations that need to be documented for tax purposes. At the end of the year, you must adjust the numbers for the premium tax credit you received. This can be in your favor when you lose a job or add a family member. However, if your financial status increases or you’ve had someone move out, you may have to pay back some of what you began receiving at the beginning of the year. It is essential to keep records of what and when everything occurred. This can help you receive what you are due.

Cost Sharing Reductions:This works when you are selecting your plan. Once you qualify for premium tax credits, you will also need to determine if you are eligible for this additional out-of-pocket savings feature. Once qualified, you must select a plan within the Silver category. Benefits within this feature allow you to receive a lower deductible, copayment, and coinsurance, as well as a lower out-of-pocket maximum. This will vary depending on the insurance plan you select.

How Do I Estimate My Income for Health Insurance in Texas

It can be difficult for some to know what they will make monthly, especially for those who work in a gig economy. Some are temporary workers who don’t know how long their next job will last, and probably one of the reasons they don’t have set insurance they can rely on. For Marketplace insurance savings, they ask you to estimate how much you will make your expected income. To assist you in determining this amount, here are some tips.

Review your income: Begin by looking at last year’s Adjusted Gross Income (AGI). This will be the amount before taxes. It will give you a base amount you can work from.

Review your family dynamic: Adjust for any changes over the past year: raises, job changes, changes to members of the family.

Are There Other Options to Filing Qualifying for Obamacare in Texas?

While you don’t have to file married filing jointly in order to receive Obamacare. When you select other options for health insurance in Austin, you may lose the ability to claim the Premium Tax Credit because you may not meet the financial requirements.

Summary

Filing jointly helps you balance the back and forth when one partner has an unpredictable career. It allows you to use premium tax credits to reduce your tax liability. You can review your account at any time and make changes through the Marketplace to avoid tax penalties at the end of the year. To further understand how taxes work with Obamacare, contact Cover Mile, and we can assist you in finding the insurance policy that fits your situation. Contact us today!