Category: Form 8962 - Premium Tax Credit
Shared Policy and Shared Policy Allocation
When determining the Premium Tax Credit on a tax return, the taxpayer must reconcile the amounts reported on the Health Insurance Marketplace Statement (Form 1095-A) by filing Form 8962 - Net Premium Tax Credit with their tax return. However the amounts that are reported on the Form 8962 - Net Premium Credit will be affected if the underlying health care policy was a Shared Policy. In such instances, the amounts reported on the Health Insurance Marketplace Statement (Form 1095-A) may need to be allocated between the individuals on the policy. This Shared Policy Allocation would then be reported by each taxpayer on their respective tax returns.
A Shared Policy occurs when a qualified health plan has been purchased from the Marketplace or from a state health care exchange and it covers at least one individual on the tax return and at least one individual not on the tax return. This can occur under the following scenarios:
One individual on the return was a party to a divorce during the year, and they had a policy for some period with their ex-spouse;
The taxpayer is married but filing a separate return from the spouse;
One of the individuals on the tax return (taxpayer, spouse or a dependent) were enrolled in a qualified health plan by someone who is not part of your tax family (for example, the ex-spouse enrolled a child whom the taxpayer is claiming as a dependent); or
One of the individuals on the tax return (taxpayer, spouse or a dependent) enrolled someone not on the tax return in a qualified health plan (for example, the taxpayer enrolled a child whom the ex-spouse is claiming as a dependent or a child filing their own return but was covered by the taxpayer/parents).
When the taxpayer has a Shared Policy, that taxpayer will need to allocate the three amounts reported on Form 1095-A (enrollment premiums, SLCSP premiums, and/or APTC) between the taxpayer's tax return and the tax return of the other individual(s) who is not on this tax return and is filing their own return. This is known as a Shared Policy Allocation.
To enter a Shared Policy Allocation into the program from the Main Menu of the Tax Return, (Form 1040):
Select 'Payments, Estimates & EIC'
Select 'Premium Tax Credit (PTC)'
Select 'Shared Policy With Another Taxpayer.' Next select 'Shared Policy Allocation.' Select 'OK', and you will return to Form 8962 - Premium Tax Menu.
Select 'Shared Policy Allocation (Form 8962 - Part 4)'
Select Shared Policy No. 1. Enter the Policy Number of the Shared Policy, the Social Security Number of the Individual that the taxpayer is sharing the policy and the Allocation Start month and Stop month (using a two digit format for each month, for example January would be entered as 01).
You must enter the taxpayer's allocation percentage for the Enrollment Premium, the Second Lowest Cost Silver Plan and the Advance Payment of Premium Tax Credit. This allocation percentage will be displayed on line 30 of Form 8962 and it can range from zero through one hundred percent. The taxpayer may use a percentage that has been agreed on for every month for which this Shared Policy applies, or the taxpayer and the individual that they are sharing the policy may (when circumstances change) agree on different percentages for different months. However, you must use the same allocation percentage for all policy amounts (enrollment premiums, applicable SLCSP premiums, and APTC) in a month. If the taxpayer and the individual that they shared the policy with cannot agree on an allocation percentage, the allocation percentage is equal to the number of individuals enrolled by one taxpayer for whom the other taxpayer claims a personal exemption for the tax year divided by the total number of individuals enrolled in the same policy as the individual. Once the percentages and other information contained on this menu have been entered, exit this menu and you will return to the Shared Policy Allocation Menu. If a second Shared Policy needs to be entered, you will repeat this step for that second Shared Policy. Otherwise, mark 'Completed Shared Policy Allocation' as 'YES' and exit the Shared Policy Allocation Menu to return to the Shared Policy Allocation (Form 8962 - Part 4) Menu.
Select 'Enter Form 1095-A Amounts (Form 8962 Part 2 )' and input the calculated allocation amounts for the Enrollment Premium, the Second Lowest Cost Silver Plan and the Advance Payment of Premium Tax Credit. Calculate the amounts by taking the taxpayer's allocation percentage for the Enrollment Premium, the Second Lowest Cost Silver Plan and the Advance Payment of Premium Tax Credit that was agreed upon between the taxpayer and the other individual on the Shared Policy and multiply it by the amounts on Part III, Columns A, B and C of Form 1095-A for each month that the taxpayer had the Shared Policy. The program does not automatically calculate these amounts. If there are multiple Shared Policies, the applicable amounts for each policy will be added together and entered on the appropriate month. Once all the amounts have been entered for each month that the taxpayer had minimum essential coverage through the Shared Policy, exit the menu.
If there is a Net Premium Tax Credit, this amount will be reflected as a Payment on Form 1040 and the taxpayer will receive the benefit of that amount. If the Advance Payment of Premium Tax Credit exceeds the amount that the taxpayer was entitled to receive, the Excess Advance Payment of Premium Tax will be reflected in the Taxes section of the 1040 and the taxpayer will have to repay the excess advance payment on their tax return.
NOTE: This is a guide on entering Share Policy Allocations into the TaxSlayer Pro program. This is not intended as tax advice.
Last Updated: 2/22/2017