Question

Problem 7-17
The Affordable Care Act (LO 7.4)

Susan and Stan Collins live in Iowa, are married and have two children ages 6 and 10. In 2018, Susan's income is $38,290 and Stan's is $12,000 and both are self-employed. They also have $500 in interest income from tax exempt bonds. The Collins enrolled in health insurance for all of 2018 through their state exchange and elected to have the credit paid in advance. The 2018 Form 1095-A that the Collins received from the exchange lists the following information:

Annual premiums $9,800 Annual premium for the designated silver plan in the state $10,800

Assume that the Collins Form 1095-A also indicated that the total advance payment of the premium tax credit was $9,200. The Federal Poverty Line for a family of four is $24,600.

Table for Repayment of the Credit Amount

	Single	Taxpayers Other Than Single
Less than 200%	$300	$600
At least 200% but less than 300%	775	1,550
At least 300% but less than 400%	1,300	2,600
At least 400%	No limit	No limit

Click here to access the 2018 Applicable Figure Table to use for this problem.

Calculate the excess advance premium tax credit and the repayment amount for 2018.

Round any division to two decimal places before converting to a percent.

Excess advance premium tax credit	$
Repayment amount	$

Answer 1

Susan's income = $38,290 Stan's income = $12,000 Children's income = $0 Interest income from tax exempt bonds = $500

Modified AGI = 38,290 + 12,000 + 500 = 50,790

Federal Poverty Line for a family of four = 24,600

Therefore,

Modified AGI as a percentage of Federal Poverty Line for a family of four = 50,790 / 24,600 = 206%

Based on the above percentage (Modified AGI as a percentage of Federal Poverty Line for a family of four), eligible credit percentage will be 6.55% (determined by going through the instructions for Form 8962).

Therefore,

Eligible credit available = Modified AGI x Eligible credit percentage = 50,790 x 6.55% = 3,327

Annual premium for the designated silver plan in the state = $10,800

Therefore,

Excess advance tax credit = 10,800 - 3,327 = 7,473

Excess advance payment of premium tax credit or Repayment amount = 9,200 - 7,473 = 1,727 (limited to maximum cap of 1550)

Answer:

Excess advance tax credit = $7,473

Repayment Amount (Excess advance payment of premium tax credit) = $1,550