December 13, 2021 1:27 am

Repaying Premium Tax Credit Required

A couple whose household income exceeded 400% of the federal poverty level had to repay the premium tax credit for 2018 (Amburgey, TC Memo 2021-124). They applied for medical insurance through the government exchange and had a portion of their premiums paid directly to the insurer as a result of the credit to which they were entitled when they initially applied. For 2018, the income limit of 400% of the FPL was $64,960 (for a household of two), while their household income totaled $181,183. Thus, they had to repay the credit they received on an advance basis through payments made directly to their insurance company.

The court rejected the couple’s claim that the Affordable Care Act is unconstitutional. Citing the U.S. Supreme Court decision this past June (California v. Texas, S.Ct., 6/17/21 at https://www.supremecourt.gov/opinions/20pdf/19-840_6jfm.pdf), there is no merit to the couple’s claim.

Note: For 2021, those with household income above 400% of the federal poverty line may still claim a premium tax credit; their required contribution amount for health coverage obtained through a government marketplace is 8.5% of household income.

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Tax Glossary

Tax preference items

Items that may subject a taxpayer to the alternative minimum tax (AMT).

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