APTC/CSR Basics

Amir Al-Kourainy Everett J. Smith September 29, 2017

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Agenda

• I. What is APTC ? • II. Who is eligible? • III. APTC Reconciliation • IV. CSR’s • V. Case Examples

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Brainstorming Question 1

How often do consumers come to

you for help with APTC-related

issues?

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Brainstorming Question 2

What is the most challenging issue you face when helping consumers with APTC-related

issues?

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What is APTC?

• The Patient Protection and Affordable Care Act (PPACA) was passed by Congress and signed into law in March 2010. It provides for eligible consumers to receive financial assistance to purchase a plan through the Marketplace.

• Advance Payments of the Premium Tax Credit (APTC) may be used by the consumer to lower their monthly insurance payment (called their “premium”) when they enroll in a plan through the Marketplace. The consumers’ APTC is based on the projected annual household income and other household information the consumer reports on their Marketplace application.

• Depending on their actual household income for the year, they may be required to repay excess APTC received when filing their tax return.

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Who is eligible? • Who is Eligible ? • The consumer is eligible for APTC if they meet all of the

following requirements: – Have household income that falls within 100 to 400 percent of the

Federal Poverty Level (FPL) – Do not file a Married Filing Separately tax return (unless the

consumer qualifies for a special rule that allows certain victims of domestic abuse and spousal abandonment to claim the premium tax credit using the Married Filing Separately filing status)

– Cannot be claimed as a dependent by another person; and – In the same month, the consumer, or a family member:

– Enrolls in coverage (excluding “catastrophic” coverage, unless aged 30 or below) through a Marketplace

– Is not offered affordable coverage through an eligible employer-sponsored plan that provides minimum value (An employer-sponsored plan provides minimum value if the plan covers at least 60 percent of the expected total allowed costs for covered services) AND is affordable (the employee-only share of the premium is no more than 9.69% of income

– Is not eligible for other minimum essential coverage such as coverage through a government program, like Medicaid, Medicare, CHIP or TRICARE

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Income Limits

• In general, individuals and families may be eligible for APTC if theirhousehold income for the year is at least 100 percent but no more than400 percent of the FPL for their family size.

• For residents of one of the 48 contiguous states or Washington, D.C.,the following illustrates when household income would be at least 100percent but no more than 400 percent of the federal poverty line incomputing your APTC for 2017 :

Family Size Household Income One Individual • $12,060 (100%) up to $48,240

(400%)Family of 2 • $16,240 (100%) up to $64,960

(690) (400%)Family of 4 • $24,600 (100%) up to $98,400

(400%)

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How does a consumer receive their APTC?

• When the consumer or a family member applies for Marketplace coverage, the Marketplace will calculate the amount of APTC that the consumer is eligible to receive, using information the consumer provides about their family size and projected household income, and their eligibility for other, non-Marketplace coverage options described earlier.

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How does a consumer receive their APTC?

• Based upon that estimate, the consumer can decide if they want to have all, some, or none of their APTC provided directly to their insurance company to lower their monthly premiums.

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How does a consumer receive their APTC?

• If the consumer chooses to use part or all of the APTC they are eligible for, they will be required to file a tax return for the applicable tax year.

• Form 8962 will need to be filed to reconcile the amount of ATPC they receive with the premium tax credit that they may claim based on their actual household income and family size.

• If they do not opt for APTC or the Marketplace determines that they were not eligible for advance payments at the time of enrollment, they may also be eligible to claim the premium tax credit on Form 8962 when they file their tax return for the year, which may lower the amount of taxes owed on that return or increase their refund.

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Brainstorming Question 3

When a consumer qualifies for APTC, how do you help them to determine how much of the APTC they qualify for to claim? What factors

do you help them to consider?

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Factors That May Affect APTC

• The premium tax credit amount the consumer will receive for the year when they file their annual tax return may differ from the APTC calculated by the Marketplace if their family size or household income as estimated at the time of enrollment is different from the family size or household income they report on their annual tax return.

• The more their family size or household income differs from the Marketplace calculation used to compute their APTC, the more significant the difference may be between their APTC as projected and the actual premium tax credit amount that they are deemed eligible for when filing their taxes for the year.

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Life Changes that May Affect APTC

Consumers should notify the Marketplace about changes in circumstances as soon as they occur. Notifying the Marketplace immediately will allow the Marketplace to use current information to determine the consumer’s expected amount of APTC and adjust their amount. Adjustments decrease the likelihood of a significant difference between a consumer’s advance credit payments based on their projected income and their actual premium tax credit. Changes in circumstances that can affect the amount of a consumer’s APTC include:

Increases or decreases in household income, including lump sum payments (e.g., a lump sum Social Security benefit payment or taxable distribution from an individual retirement account or other retirement arrangement)

Marriage

Divorce

Birth or adoption of a child

Other changes to household composition

Gaining or losing eligibility for government sponsored or employer sponsored health care coverage

Moving to another address

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APTC Reconciliation

If a consumer purchased coverage through the Marketplace they should receive Form 1095-A, Health Insurance Marketplace Statement, from the Marketplace by early February. If this form shows that APTC was paid on behalf of a consumer or a member of their family, they are required to complete Form 8962, Premium Tax Credit (PTC), to reconcile those advance payments.

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What It Means to Reconcile

• If the consumer had a Marketplace plan and used APTC to lower their monthly premium payment, they’ll have to “reconcile” when they file their federal taxes. This means they’ll compare 2 figures:

• The amount of APTC received during the year. (This was paid directly to the consumer’s health plan so their monthly payment was lower.)

• The premium tax credit the consumer actually qualifies for based on their final household income for the year.

• Any difference between the two figures will affect the consumer’s refund or tax owed.

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Consequences of Not Reconciling APTC

• If consumers have questions about the information on Form 1095-A, or about receiving Form 1095-A, they should contact their Marketplace directly.

• If APTC is made on behalf of a consumer or an individual in their family, and they do not file a tax return, they will not be eligible for APTC or cost-sharing reductions to help pay for their Marketplace health insurance coverage in future years. This means that they will be responsible for the full cost of their monthly premiums. Form 1095-A provides information you will need when completing Form 8962.

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Brainstorming Question 4

APTC reconciliation can be a complicated topic. What is one thing you do to break down

the process and explain how and why this is necessary in an easily understandable way?

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Cost-sharing Reductions

• Cost-sharing reductions (CSR) are discounts that lowers the amount a consumer has to pay for deductibles, copayments, and coinsurance. In the Health Insurance Marketplace, CSRs are often called “extra savings.” If a consumer qualifies, they must enroll in a plan in the Silver category to get the extra savings.

• Individuals and families with incomes up to 250 percent of the poverty line may be eligible to receive CSR’s.

• AI/AN consumers have special rules. For example, they can qualify for CSR payments with incomes up to 300 percent of the poverty line and they can apply CSR payments to any metal level, not just silver plans.

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Case Examples • David has an offer of employer

sponsored coverage (ESC). The plan he is offered covers 70% of his total allowable healthcare costs and his required contribution for self-only coverage is 9% of his income. David would like to decline his offer of ESC and purchase a plan through the Marketplace.

• Is David eligible for APTC if he chooses to purchase a Marketplace plan?

• A. Yes • B. No

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Answer

• No, David is not eligible to receive APTC when purchasing a Marketplace plan. The ESC plan covers more than 60% of total allowable costs, which meets minimum value, and the cost of the plan is less than 9.69% of his income.

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Case Examples

• Sarah’s household income is at 240% of the FPL. She has an offer of ESC. Self-only coverage for her would cost 8% of her income. The plan covers 50% of total allowable costs.

• Is Sarah eligible for financial assistance if she chooses to purchase a Marketplace plan?

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Answer

• Yes, although Sarah has an offer of ESC, and the plan meets the affordability standard, the plan covers only 50% of total allowable costs. This does not meet the approximately 60% minimum value threshold. Sarah would be eligible to receive ATPC if she chose to purchase a Marketplace plan. In addition, because her total household income is 238% of the FPL, she may also qualify for CSR’s to help her pay additional healthcare costs like deductibles and copayments.

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Brainstorming Question 5

What is a best practice that you have found to be effective in handling and resolving APTC-

related issues?

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Brainstorming Questions 6 and 7

What is the most valuable thing you learned during this presentation?

What would you like to know more about?

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Resources

https://www.irs.gov/affordable-care-act/individuals-and-families/questions-and-answers-on-the-premium-tax-credit#Reporting

https://www.healthcare.gov/glossary/premium-tax-credit/

https://marketplace.cms.gov/technical-assistance-resources/income-resource-chart.pdf