Question

Problem 7-16
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 but did not elect 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 Federal Poverty Line for a family of four $24,600

Compute the Collins' premium tax credit for 2018.

Click here to access the 2018 Applicable Figure Table.

Round any division to two decimal places before converting to a percent. If required, round your final answer to the nearest dollar.
$

Answer 1

Modified AGI = 38290 + 12000 + 500 = 50790

Federal Poverty Line for a family of four = 24600

Therefore,

Modified AGI as percentage of Federal Poverty Line for a family of four = 50790/24600 = 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 = 50790 x 6.55% = 3327

Therefore,

Excess advance tax credit = 10800 - 3327 = 7473

Excess advance payment of premium tax credit = 9200 - 7473 = 1727 (limited to maximum cap of 1550)

Answer:

Excess advance tax credit = 7473

Excess advance payment of premium tax credit = 1550