Health Care

Health Care

How do health care reform and taxes connect? The Affordable Care Act is single largest change to the tax code in two decades. Find help navigating the complexities of the new health care legislation, Medicare, Medicaid and other medical deductions.

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Pioneer
Posts: 2
Registered: ‎02-05-2018
Accepted Solution

Health Insurance Deductions if subsidy is reimbursed

My wife and I purchased health insurance through the ACA Marketplace in 2017.

I elected to take advance payment of the premium tax credits. As my income exceeded the allowable limit in 2017, I will be repaying all credits received for the year.

My question is:

Am I allowed to deduct the full amount of the 2017 medical insurance premiums, even though I will be repaying the subsidy on my 2017 tax return?

Esteemed Neighbor
Posts: 198
Registered: ‎02-28-2016

Re: Health Insurance Deductions if subsidy is reimbursed

Because Form 8962 will be showing a full repayment of the PTC you should include the full premium as an itemized amount to determine your medical deduction on Schedule A.

Esteemed Neighbor
Posts: 198
Registered: ‎02-28-2016

Re: Health Insurance Deductions if subsidy is reimbursed

I'll add that these premiums are deductible in 2017 (even though you will make repayment in 2018) because the insurance company was paid in 2017. The ACA paid them for you in similar fashion as if you had used a personal credit card for payment and paid card company later.

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Pioneer
Posts: 2
Registered: ‎02-05-2018

Re: Health Insurance Deductions if subsidy is reimbursed

Thank you BD,

I thought this might be the case, but I really hoped for a reinforcing opinion.

Pioneer
Posts: 1
Registered: ‎02-16-2018

Re: Health Insurance Deductions if subsidy is reimbursed

My son had a similar situation, where he was in the health insurance marketplace for the first 6 months of 2017 due to being in graduate school.  It appears that he will now have to pay back the premium payments because his income of course exceeded the limits, because he had a job for the last 6 months.  Is there a way to deduct this payment on the federal tax form so that his penalty is not so large.