Q. I have a young son who lives in another state, but I claim him as a dependent for federal tax purposes. Can I apply through the marketplace in his state for his coverage, and my state’s marketplace for my coverage? How would the premium tax credits work?
A. You should be able enroll your son in a child-only policy on his state marketplace and purchase a separate plan on your own marketplace, says Brian Haile, senior vice president for tax policy at Jackson Hewitt Tax Service.
If your income is less than 400 percent of the federal poverty level ($62,040 for a family of two), you may qualify for a premium tax credit. The amount of the tax credit is generally based on the premium of the second lowest cost silver level plan in your coverage area. In a case like yours, in which family members live in different states, the Internal Revenue Service has proposed adding the premiums of the plans in the different geographic areas together and using that total as the premium on which to base the tax credit.
You can either take the tax credit in advance or receive it at the end of the year when you file your taxes. If you choose to take it in advance, the IRS will send the credit directly to the insurer and you’ll pay less in premiums. But in a case like yours, where you’re dealing with two health plans and two state marketplaces, it may be administratively tricky to divvy up the tax credit between the two insurers, says Haile.
If you can afford to, it would be much simpler to claim the tax credit at the end of the year when you file your taxes.
Since each exchange is different, your best bet may be to explain your situation to someone at your state marketplace when you apply for your own coverage and ask how to proceed, says Haile.
“It’s going to take a fair amount of patience to work this out,” he says.
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