QUESTION

My spouse and I want to cover our 25-year-old child on our marketplace plan and apply for premium tax credits. We don’t claim her as a dependent, she doesn’t live with us, and she has a job. Do we have to count our child's income as part of our income?

Individuals with coverage | Issues For Young Adults: Student Health Plans and Coverage on Parent’s Health Plans
ANSWER

If you are applying for premium tax credits on HealthCare.gov, you will not be able to add your child to your own marketplace plan if you do not claim them as a tax dependent. In this case, you and your spouse will be counted as a household of two and the income you two report on your joint tax return will be counted for purposes of determining your eligibility for premium tax credits. Your child will have to apply for coverage separately; she will be counted as a household of one, and her income will be counted separately to determine her eligibility for premium tax credits.

Although your child is legally entitled to be on the same policy as you because they are under age 26, the IT functionality available through the federally facilitated marketplace cannot currently accommodate a family plan in which there are two separate tax credits allocated to two separate tax households (yours and your child's). So if you do not claim your child as a tax dependent, you must apply separately for coverage and premium tax credits. Note that this means your child will have their own separate deductible and maximum out-of-pocket cap under their policy.

Alternatively, you and your child could choose not to apply for premium tax credits, so that you are submitting only one application as a family. In such a case, you can add your child to your plan even if they are not your tax dependent. While this will allow you to share a deductible and maximum out-of-pocket cap, you will forgo the premium and cost-sharing subsidies available through the marketplace.

(26 U.S.C. § 36B-3(h); CMS, Application Spotlight: Family and Household Composition Section, March 2017.)

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