Q. How can victims of domestic violence get premium tax credits on the exchange if they're still married but don't want to file a joint tax return with their spouse?
A. This issue, long recognized as a problem by advocates and government officials alike, has been resolved to some extent. People with incomes up to 400 percent of the federal poverty level (currently $45,960 for an individual) are eligible for premium tax credits for policies on the health insurance marketplaces. In general, however, married couples only qualify if they file their taxes jointly. For victims of domestic violence who may have moved out and fear having contact with their spouse, filing a joint return may not be a safe option.
The IRS subsequently clarified that domestic violence victims could file as a head of household and be eligible for the tax credits. But that designation requires a taxpayer to have paid at least half the cost of keeping a home for the year and had a child living at home. Childless people or those who left an abusive relationship less than a year ago don’t qualify.
Earlier this week, the IRS announced a further tweak to the rules: Married taxpayers who have been subjected to abuse can now qualify for tax credits using married filing separately tax status.
In addition, the Department of Health and Human Services announced that married victims of abuse would get an extra two months – until May 31 – to sign up for a health plan on the federally facilitated exchange serving 36 states.
State-based marketplaces are expected to follow suit, says Brian Haile, senior vice president for health policy at Jackson Hewitt Tax Service.
Consumer advocates welcomed the change while questioning the timing.
“It’s a good first step,” says Haile, “but it’s hard to understand why the federal government took two years to come to such an obvious conclusion and then announce it only five days before the end of open enrollment.”
Haile says he’s begun making calls to survivors with whom he’s worked who may be affected by this news, but “this is a mammoth task.”