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Category: What To Know

I’m divorced and I pay alimony to my ex-spouse. Should I deduct that from my income in determining my eligibility for subsidies?

Written by HummingbirdinsAdmin on . Posted in Frequently Asked Questions.

For divorces after December 31, 2018, alimony payments are no longer deductible for the paying spouse and alimony is not included as income for the recipient spouse.

For pre-2019 divorces, old tax rules apply.  The paying spouse can deduct alimony payments from income and the recipient spouse must report alimony payments as income on the federal tax return.  However, divorced couples have the option of modifying their pre-2019 divorce agreement to adopt the new tax rules.

What income is counted in determining my eligibility for premium tax credits?

Written by HummingbirdinsAdmin on . Posted in Frequently Asked Questions.

Eligibility for premium tax credits is based on your Modified Adjusted Gross Income, or MAGI. When you file a federal income tax return, you must report your adjusted gross income (which includes wages and salaries, interest and dividends, unemployment benefits, and several other sources of income.)  MAGI modifies your adjusted gross income by adding to it any non-taxable Social Security benefits you receive, any tax-exempt interest you earn, and any foreign income you earned that was excluded from your income for tax purposes.

Note that eligibility for Medicaid and CHIP is also based on MAGI, although some additional modifications may be made in determining eligibility for these programs. Contact your Marketplace or your state Medicaid program for more information.

I’m enrolled in COBRA now but I want to drop it. Does that affect my eligibility for Marketplace subsidies?

Written by HummingbirdinsAdmin on . Posted in Frequently Asked Questions.

No, having COBRA doesn’t affect your eligibility for premium tax credits. However, you can only drop COBRA and sign up for a Marketplace plan and premium tax credits during Open Enrollment. You will have to drop your COBRA coverage effective on the date your new Marketplace plan coverage begins. After Open Enrollment ends, however, if you voluntarily drop your COBRA coverage or stop paying premiums, you will not be eligible for a special enrollment opportunity and will have to wait until the next Open Enrollment period.