IRS Releases Publication 974 (12/2016), Premium Tax Credit (PTC)

Future Developments

For the latest information about developments related to Pub. 974, such as legislation enacted after it was published, go to http://www.irs.gov/pub974.

Reminders

Requirement to reconcile advance payments of the premium tax credit. If you, your spouse with whom you are filing a joint return, or a dependent was enrolled in coverage through the Marketplace for 2016 and advance payments of the premium tax credit (APTC) were made for this coverage, you must file a 2016 return and attach Form 8962, Premium Tax Credit (PTC). You (or whoever enrolled you) should have received Form 1095-A, Health Insurance Marketplace Statement, from the Marketplace with information about your coverage and any APTC. You must attach Form 8962 even if someone else enrolled you, your spouse, or your dependent. If you are a dependent who is claimed on someone else's 2016 return, you do not have to attach Form 8962.

Report changes in circumstances when you re-enroll in coverage and during the year. If APTC is being paid for an individual in your tax family (defined later) and you have had certain changes in circumstances (see the examples below), it is important that you report them to the Marketplace where you enrolled in coverage. Reporting changes in circumstances promptly will allow the Marketplace to adjust your APTC to reflect the premium tax credit (PTC) you are estimated to be able to take on your tax return. Adjusting your APTC when you re-enroll in coverage and during the year can help you avoid owing tax when you file your tax return. Changes that you should report to the Marketplace include the following.

Health coverage tax credit (HCTC). The HCTC is a tax credit that is calculated based on a percentage of health insurance premiums for coverage of eligible taxpayers and their qualifying family members. The HCTC and the PTC are different tax credits that have different eligibility rules. If you think you may be eligible for the HCTC, see Form 8885 and its instructions or visit http://www.irs.gov/HCTC before completing Form 8962.

Health insurance options. If you need health coverage, visit HealthCare.gov to learn about health insurance options that are available for you and your family, how to purchase health insurance, and how you might qualify to get financial assistance with the cost of insurance.

Photographs of missing children. The Internal Revenue Service is a proud partner with the National Center for Missing & Exploited Children® (NCMEC). Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.

Introduction

This publication covers the following general topics, relating to the premium tax credit, which are also covered in the Form 8962 instructions.

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Tax questions. If you have a tax question not answered by this publication, check IRS.gov and How To Get Tax Help at the end of this publication.

Questions about Form 1095-A, Health Insurance Marketplace Statement. If you or a member of your tax family was enrolled in a qualified health plan through a Marketplace in 2016, you should have received a Form 1095-A by early February 2017. Contact your Marketplace if you do not receive a Form 1095-A or if you have questions about the accuracy of your Form 1095-A.

Useful Items

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Publication

What is the Premium Tax Credit (PTC)?

Premium tax credit (PTC). The PTC is a tax credit for certain people who enroll, or whose family member enrolls, in a qualified health plan offered through a Marketplace. The credit provides financial assistance to pay the premiums for the qualified health plan by reducing the amount of tax you owe, giving you a refund, or increasing your refund amount. You must file Form 8962 to compute and take the PTC on your tax return.

Advance payment of the premium tax credit (APTC). APTC is a payment made during the year to your insurance provider that pays for part or all of the premiums for a qualified health plan covering you or an individual in your tax family. Your APTC eligibility is based on the Marketplace's estimate of the PTC you will be able to take on your tax return. If APTC was paid for you or an individual in your tax family, you must file Form 8962 to reconcile (compare) this APTC with your PTC. If the APTC is more than your PTC, you have excess APTC and you must repay the excess, subject to certain limitations. If your PTC is more than the APTC, you can take the difference as a tax credit on your tax return, which will reduce your tax payment or increase your refund.

Note. The Marketplace determined your eligibility for and the amount of your 2016 APTC using projections of your income and your number of personal exemptions when you enrolled in a qualified health plan. If this information changed during 2016 and you did not promptly report it to the Marketplace, the amount of APTC paid may be substantially different from the amount of PTC you can take on your tax return. See Report changes in circumstances when you re-enroll in coverage and during the year, earlier, for changes that can affect the amount of your PTC.

Who Must File Form 8962

You must file Form 8962 with your income tax return (Form 1040A, or Form 1040NR) if any of the following apply to you.

CAUTION: If you are filing Form 8962, you cannot file Form 1040EZ, Form 1040NR-EZ, Form 1040-SS, or Form 1040-PR.

If someone else enrolled an individual in your tax family in coverage, and APTC was paid for that individual's coverage, you must file Form 8962 to reconcile the APTC. You need to obtain a copy of the Form 1095-A from the person who enrolled the individual.

TIP: If you are claimed as a dependent, the person who claims you will file Form 8962 to take the PTC and, if necessary, repay excess APTC for your coverage. You do not need to file Form 8962.

Who Can Take the PTC

You can take the PTC for 2016 if you meet the conditions under (1) and (2) below.

For additional requirements and more details, see Applicable taxpayer, later.

Terms You May Need To Know

This terms defined below are generally the same as those in the Form 8962 instructions. However, additional information is provided below on what documentation to keep if you are a victim of domestic abuse or spousal abandonment and on Minimum Essential Coverage, later.

Tax family. For purposes of the PTC, your tax family consists of the individuals for whom you claim a personal exemption on your tax return (generally you, your spouse with whom you are filing a joint return, and your dependents). Your personal exemptions are reported on your Form 1040A, line 6d, or Form 1040NR, line 7d. Your family size equals the number of individuals in your tax family (including yourself). If no one, including you, claims a personal exemption for you, and you indicated to the Marketplace when you enrolled that you would claim your own personal exemption, see Individuals Filing a Tax Return and Claiming No Personal Exemptions, later.

Household income. For purposes of the PTC, household income is the modified adjusted gross income (modified AGI) of you and your spouse (if filing a joint return) (see Line 2a in the Form 8962 instructions) plus the modified AGI of each individual whom you claim as a dependent and who is required to file an income tax return because his or her income meets the income tax return filing threshold (see Line 2b in the Form 8962 instructions). Household income does not include the modified AGI of those individuals whom you claim as dependents and who are filing a 2016 return only to claim a refund of withheld income tax or estimated tax.

Modified AGI. For purposes of the PTC, modified AGI is the AGI on your tax return plus certain income that is not subject to tax (foreign earned income, tax-exempt interest, and the portion of social security benefits that is not taxable). Use Worksheet 1-1 and Worksheet 1-2, in the Form 8962 instructions, to determine your modified AGI.

Taxpayer's tax return including income of a dependent child. A taxpayer who includes the gross income of a dependent child on the taxpayer's tax return must include on Worksheet 1-2 the child's tax-exempt interest and the portion of the child's social security benefits that is not taxable.

Coverage family. Your coverage family includes all individuals in your tax family who are enrolled in a qualified health plan and are not eligible for minimum essential coverage (other than coverage in the individual market). The individuals included in your coverage family may change from month to month. If an individual in your tax family is not enrolled in a qualified health plan, or is enrolled in a qualified health plan but is eligible for minimum essential coverage (other than coverage in the individual market), he or she is not part of your coverage family. Your PTC is available to help you pay only for the coverage of the individuals included in your coverage family.

Monthly credit amount. The monthly credit amount is the amount of your tax credit for a month. Your PTC for the year is the sum of all of your monthly credit amounts. Your credit amount for each month is the lesser of:

You are generally not allowed a monthly credit amount for the month if any part of the enrollment premiums for which you are responsible that month has not been paid by the due date of your tax return (not including extensions). However, if you became eligible for APTC because of a successful eligibility appeal and you retroactively enrolled in the plan, the portion of the enrollment premium for which you are responsible must be paid on or before the 120^th day following the date of the appeals decision. Premiums another person pays on your behalf are treated as paid by you.

If your share of the enrollment premiums is not paid, the issuer may terminate coverage. The termination is generally effective no sooner than the second month of nonpayment. For any months you were covered but did not pay your share of the premiums, you are not allowed a monthly credit amount.

Applicable SLCSP premium. The applicable SLCSP premium is the second lowest cost silver plan premium offered through the Marketplace where you reside that applies to your coverage family (described earlier). The SLCSP premium is not the same as your enrollment premium unless you enroll in the applicable SLCSP. Form 1095-A, Part III, column B, generally reports the applicable SLCSP premium. If no APTC was paid for your coverage, Form 1095-A, Part III, column B, may be wrong or blank or may report your applicable SLCSP premium as -0-. Also, if you had a change in circumstances during 2016 that you did not report to the Marketplace, the SLCSP premium reported on Form 1095-A in Part III, column B, may be wrong. In either case you must determine your correct applicable SLCSP premium. You do not have to request a corrected Form 1095-A from the Marketplace. See Missing or incorrect SLCSP premium on Form 1095-A, under Line 10 in the Form 8962 instructions.

Monthly contribution amount. Your monthly contribution amount is used to calculate your monthly credit amount. It is the amount of your household income you would be responsible for paying as your share of premiums each month if you enrolled in the applicable SLCSP. It is not based on the amount of premiums you paid out of pocket during the year. You will compute your monthly contribution amount in Part I of Form 8962.

Qualified health plan. For purposes of the PTC, a qualified health plan is a health insurance plan or policy purchased through a Marketplace at the bronze, silver, gold, or platinum level. Throughout this publication, a qualified health plan is also referred to as a policy. Catastrophic health plans and stand-alone dental plans purchased through the Marketplace, and all plans purchased through the Small Business Health Options Program (SHOP), are not qualified health plans for purposes of the PTC. Therefore they do not qualify a taxpayer to take the PTC.

Applicable taxpayer. You must be an applicable taxpayer to take the PTC. Generally, you are an applicable taxpayer if your household income for 2016 (described earlier) is at least 100% but not more than 400% of the Federal poverty line for your family size (provided in Tables 1-1, 1-2, and 1-3, in the Form 8962 instructions) and no one can claim you as a dependent for 2016. In addition, if you were married at the end of 2016, you must file a joint return to be an applicable taxpayer unless you meet one of the exceptions described under Married taxpayers, later.

For individuals with household income below 100% of the Federal poverty line, see Household income below 100% of the Federal poverty line under Line 6, in the Form 8962 instructions.

Individuals who are incarcerated. Individuals who are incarcerated (other than pending disposition of charges, for example awaiting trial) are not eligible for coverage in a qualified health plan through a Marketplace. However, these individuals may be applicable taxpayers and take the PTC for the coverage of individuals in their tax families who are eligible for coverage in a qualified health plan.

Individuals who are not lawfully present. Individuals who are not lawfully present in the United States are not eligible for coverage in a qualified health plan through a Marketplace. They cannot take the PTC for their own coverage and are not eligible for the repayment limitations in Table 5 (see the Form 8962 instructions) for APTC paid for their own coverage. However, these individuals may be applicable taxpayers and take the PTC for the coverage of individuals in their tax families, such as their children, who are lawfully present and eligible for coverage in a qualified health plan. For more information about who is treated as lawfully present for this purpose, visit HealthCare.gov. See Individuals Not Lawfully Present in the United States Enrolled in a Qualified Health Plan, later, for more information on reconciling APTC when an unlawfully present person is enrolled individually or with lawfully present family members.

Married taxpayers. If you are considered married for federal income tax purposes, you must file a joint return with your spouse to take the PTC unless one of the two exceptions below applies to you.

You are not considered married for federal income tax purposes if you are divorced or legally separated according to your state law under a decree of divorce or separate maintenance. In that case, you cannot file a joint return but may be able to take the PTC on your separate return. See Pub. 501, Exemptions, Standard Deduction, and Filing Information.

If you are considered married for federal income tax purposes, you may be eligible to take the PTC without filing a joint return if one of the two exceptions below applies to you. If Exception 1 applies, you can file a return using head of household or single filing status and take the PTC. If Exception 2 applies, you are treated as married but can take the PTC with the filing status of married filing separately.

Exception 1--Certain married persons living apart. You may file your return as if you are unmarried and take the PTC if one of the following applies to you.

Spousal abandonment. A taxpayer is a victim of spousal abandonment for a tax year if, taking into account all facts and circumstances, the taxpayer is unable to locate his or her spouse after reasonable diligence.

Records of domestic abuse and spousal abandonment. If you checked the box in the upper right corner of Form 8962 indicating that you are eligible for the PTC despite having a filing status of married filing separately, you should keep records relating to your situation, like with all aspects of your tax return. What you have available may depend on your circumstances. However, the following list provides some examples of records that may be useful. (Do not attach these records to your tax return.)

Minimum Essential Coverage

Under the health care law, certain health coverage is called minimum essential coverage (MEC). You generally cannot take the PTC for an individual in your tax family for any month that the individual is eligible for minimum essential coverage, except for coverage in the individual market, defined below. Minimum essential coverage includes:

For more information on what is minimum essential coverage, see http://www.irs.gov/Affordable-Care-Act/Individuals-and-Families/Individual-Shared-Responsibility-Provision.

Note. Your minimum essential coverage may be reported to you on Form 1095-A, Form 1095-B, or Form 1095-C.

MEC eligibility when Marketplace does not discontinue APTC. If an individual in your tax family is enrolled in a qualified health plan for which APTC was made and the individual is or will soon become eligible for other MEC, you must notify the Marketplace about the other MEC and that the APTC for the individual's coverage should be discontinued. If the Marketplace does not discontinue APTC for the first calendar month beginning after the month you notify the Marketplace, the individual is treated as eligible for the other MEC no earlier than the first day of the second calendar month beginning after the first month the individual may enroll in the other MEC. A different rule applies to Medicaid and CHIP eligibility, discussed later under Government-Sponsored Programs.

Expatriate Health Plans

In general, an expatriate health plan is certain health insurance coverage that is offered to foreign nationals who are temporarily assigned for work in the United States, United States residents who are temporarily working outside of the United States, and certain non-employees (such as students and missionaries) who are travelling internationally. To qualify, the health insurance coverage generally must offer a minimum level of benefits in the region in which the covered individual is temporarily located and be offered by a qualifying expatriate health insurance issuer. An expatriate health plan is considered employer-sponsored coverage for a primary insured who receives it through his or her employer (and for that employee's covered dependents). It is considered coverage in the individual market for any other primary insured.

Individual Market Plans

A health plan offered in the individual market is health insurance coverage provided to an individual by a health insurance issuer licensed by a state, including a qualified health plan offered through the Marketplace. Even though these plans are MEC, eligibility for coverage in the individual market does not prevent an individual from qualifying for the PTC for coverage in a qualified health plan purchased through the Marketplace.

Coverage in the individual market also includes coverage under certain expatriate health plans offered to students and religious missionaries travelling internationally. See Expatriate Health Plans above.

Government-Sponsored Programs

The following government-sponsored programs are minimum essential coverage.

Example 1. Ellen was enrolled in a qualified health plan with APTC. She turned 65 on June 3 and became eligible for Medicare. Ellen must apply to Medicare to receive benefits. She applied to Medicare in September and was eligible to receive Medicare benefits beginning on December 1. Ellen completed the requirements necessary to receive Medicare benefits by September 30 (the last day of the third full calendar month after the event that established her eligibility, turning 65). She was eligible for Medicare coverage on December 1, the first day of the first full month that she could receive benefits. Thus, Ellen can get the PTC for her coverage in the qualified health plan for January through November. Beginning in December, Ellen cannot get the PTC for her coverage in the qualified health plan because she is eligible for Medicare.

Example 2. The facts are the same as Example 1, except that Ellen did not apply for the Medicare coverage by September 30. Ellen is considered eligible for government-sponsored coverage beginning on October 1. She can get the PTC for her coverage for January through September. She cannot get the PTC for her coverage in a qualified health plan as of October 1, the first day of the fourth month after she turned 65.

Exceptions. While you are generally considered eligible for government-sponsored minimum essential coverage (and are ineligible for the PTC) if you are able to enroll in that coverage, you are considered eligible for government-sponsored coverage under the following programs only if you are enrolled in the program.

Retroactive coverage. If APTC is being paid for coverage in a qualified health plan and you become eligible for government coverage that is effective retroactively (such as Medicaid or CHIP), you will not retroactively lose the PTC for your coverage. You can get the PTC for your coverage until the first day of the first calendar month after you are approved for the government coverage.

Example. In November, Freda enrolled in a qualified health plan for the following year and got APTC for her coverage. Freda lost her part-time job and on April 10 applied for coverage under the Medicaid program. Freda's application was approved on May 15, with Medicaid coverage retroactively effective April 1. For purposes of the PTC, Freda is considered eligible for government-sponsored coverage on June 1, the first day of the first calendar month after her application was approved. Freda may be eligible for the PTC for January through May.

Note. If Medicaid or CHIP coverage for you or a family member is terminated due to nonpayment of premiums, you cannot get the PTC for the coverage of that individual (for the remainder of the year of the termination).

Medicaid or CHIP eligibility when Marketplace does not discontinue APTC. If a determination is made that an individual who is enrolled in a qualified health plan for which APTC is made is eligible for Medicaid or CHIP but the Marketplace does not discontinue APTC for the first calendar month beginning after the eligibility determination, the individual is treated as eligible for Medicaid or CHIP no earlier than the first day of the second calendar month beginning after the eligibility determination.

Employer-Sponsored Plans

The following employer-sponsored plans are MEC.

Employer-sponsored plans that are MEC are also referred to as eligible employer-sponsored plans.

Exceptions. The following paragraphs discuss when employer-sponsored plans are not considered MEC and the circumstances in which you may be eligible for the PTC even if you have an offer of coverage under an employer-sponsored plan.

Excepted benefits. Employer-sponsored health coverage that is limited to excepted benefits is not MEC. Excepted benefits include stand-alone vision and dental plans, workers' compensation coverage, and coverage limited to a specified disease or illness.

Affordability and minimum value. Even if you had the opportunity to enroll in coverage offered by your employer, you are considered eligible for an employer-sponsored plan (and cannot get the PTC for your coverage in a qualified health plan) only if the employer-sponsored coverage is affordable (defined later) and the coverage provides minimum value (defined later). Your tax family members also may be unable to get the PTC for coverage in a qualified health plan for months they were eligible to enroll in employer-sponsored coverage offered to them by your employer but only if the coverage was affordable and provided minimum value for you. In addition, if you or your family member enrolls in the employer coverage, the individual enrolled cannot get the PTC for coverage in a qualified health plan, even if the employer coverage is not affordable or does not provide minimum value.

Waiting periods and other periods without access to benefits. You are not considered eligible for employer coverage, and can get the PTC for your coverage in a qualified health plan if you are otherwise eligible, for a month when you cannot receive benefits under the employer coverage (for example, you are in a waiting period before the employer coverage becomes effective). However, if you could have enrolled in employer coverage that is affordable and provides minimum value and you did not enroll during an enrollment period, you cannot get the PTC for your coverage in a qualified health plan for the period you could have been enrolled in the employer coverage.

Coverage after employment ends. If your employment with an employer ends and you are offered employer coverage by your former employer (for example, COBRA or retiree coverage), you are considered eligible for that employer coverage for PTC purposes only for the months that you are enrolled in the employer coverage. This same rule applies to an individual who may enroll in the coverage by reason of a relationship to a former employee.

Individual not in your tax family. An individual who can enroll in your employer coverage who is not a member of your tax family (for example, an adult non-dependent child under age 26) is considered eligible for the employer coverage for PTC purposes only for the months the individual is enrolled in the employer coverage.

How to determine if the plan is affordable. Your employer coverage is generally considered affordable for you and for a family member if your share of the annual cost for self-only coverage, which is sometimes referred to as the employee required contribution, is not more than 9.66% of your tax family's household income for 2016. For 2017, this threshold will increase to 9.69%. Self-only coverage is used for this calculation even if you have a spouse or dependents and therefore would enroll in coverage that is not self-only coverage (for example, family coverage). However, employer-sponsored coverage is not considered affordable if, when you or a family member enrolled in a qualified health plan, you gave accurate information about the availability of employer coverage to the Marketplace, and the Marketplace determined that you were eligible for APTC for the individual's coverage in the qualified health plan. See Determining affordability at the time of enrollment, later, for more information on this rule.

Certain employer arrangements. An employee's required contribution for employer-sponsored coverage may be affected by various arrangements offered by the employer.

Wellness program incentives. If the employer that offered you (or your spouse) employer-sponsored coverage for 2016 also offered a wellness incentive that potentially affected the amount that you had to pay towards coverage, the following rules apply: if the condition for satisfying the wellness incentive (in other words, the condition the employee must meet to pay the smaller amount for coverage) relates exclusively to tobacco use, your required contribution is based on the amount you would have paid for coverage if you had satisfied the condition for the wellness incentive. Wellness incentives relating exclusively to tobacco use are treated as satisfied in determining your required contribution regardless of whether you would have actually earned the incentive had you enrolled in the coverage. If factors other than tobacco use are part of the condition for satisfying the wellness incentive, your required contribution is based on the amount you would have paid for coverage had you not satisfied the wellness incentive.

Example. George can enroll in employer coverage. George's monthly premiums for self-only coverage are $450. If George, who is a smoker, attends a smoking cessation class, his monthly premiums will be reduced by $100. If George completes a cholesterol screening, his monthly premiums will be reduced by $50. Whether or not George actually completes either of these wellness program incentives, for purposes of determining whether the coverage is affordable for George, his required contribution will be considered to be the amount reduced by the $100 incentive for attending a smoking cessation class but not reduced by the $50 incentive for completing a cholesterol screening. Therefore, for purposes of determining whether his coverage is considered affordable, George's required contribution is $350.

Health reimbursement arrangements (HRAs). If the employer that offered you employer-sponsored coverage for 2016 also contributed (or offered to contribute) to an HRA that may be used to pay premiums for the employer-sponsored coverage, your required contribution for the employer-sponsored coverage is reduced by the amount the employer contributed (or offered to contribute) to the HRA for 2016, as long as you were informed of the HRA contribution offer by a reasonable time before you had to decide whether to enroll in the coverage.

Health flex contributions. If the employer that offered you (or your spouse) employer-sponsored coverage for 2016 also made (or offered to make) a health flex contribution for 2016, your required contribution for the employer-sponsored coverage is reduced by the amount of the health flex contribution (or offer). A health flex contribution is an employer contribution to a cafeteria plan that may be used only to pay for medical care (and not taken as cash or other taxable benefits), and is available for use toward the purchase of minimum essential coverage. Cafeteria plan contributions that may be used for expenses other than medical care are not health flex contributions and so do not reduce your required contribution.

Opt-out payments. If the employer that offered you (or your spouse) employer-sponsored coverage for 2016 offered you an additional payment if you declined to enroll in the coverage (an "opt-out payment"), your required contribution for employer-sponsored coverage is increased by amounts that the employer offered to pay you for declining the coverage. In some cases, an employer may make this opt-out payment only if the employee both declines the coverage and also satisfies another condition (such as enrolling in coverage offered by the employee's spouse). If your employer imposed other conditions on receiving the opt-out payment (in addition to declining the employer's health coverage), you may treat the opt-out payment as increasing the employee's required contribution only if you can demonstrate that you met the conditions (such as enrolling in coverage offered by your spouse's employer).

More information about employer arrangements. You should contact your employer if you have questions about the effect of the employer arrangements described above on your required contribution.

CAUTION: If your employer or the employer of a family member offered minimum essential coverage providing minimum value and provided you a Form 1095-C and the employer also offered a non-health flex contribution or an opt-out payment, the amount reported on Line 15 of Form 1095-C may not accurately reflect the amount of your required contribution for purposes of the PTC. If you have questions about the amount reported on Line 15, contact your employer using the contact number provided on the Form 1095-C.

Determining affordability at the time of enrollment. Your employer coverage is not considered affordable, if, when you enroll in a qualified health plan, the Marketplace determines that your required contribution for employer coverage will be more than 9.66% of what the Marketplace estimates will be your household income and therefore that you are eligible for APTC for coverage in the qualified health plan. Eligibility for employer coverage in this situation does not disqualify you from taking the PTC when you file your tax return, even if your required contribution for coverage was not more than 9.66% of the household income on your return. However, you will be treated as eligible for affordable employer coverage based on the household income on your tax return if:

Example 2. The facts are the same as in Example 1, except that Celia is married to Jon and the employer's plan required Celia to contribute $5,300 for coverage for Celia and Jon for 2016 (11.3% of Celia's household income). Because Celia's required contribution for self-only coverage ($3,450) does not exceed 9.66% of household income, her employer's plan is considered affordable for Celia and Jon. Both Celia and Jon are considered eligible for the employer coverage for all months in 2016 and cannot get the PTC for coverage in a qualified health plan.

Example 3. Don was eligible to enroll in employer coverage in 2016. Don's required contribution for self-only coverage that provided minimum value was $3,700. Don applied for coverage in a qualified health plan through the Marketplace. The Marketplace projected that Don's 2016 household income would be $37,000 and determined that Don's employer coverage was unaffordable because Don's required contribution was more than 9.66% of Don's household income. Don enrolled in a qualified health plan through the Marketplace with APTC and not in the employer coverage. In December, Don received an unexpected $2,500 bonus, which increased his 2016 household income to $39,500. Although Don's required contribution for the employer coverage was not more than 9.66% of the household income on Don's tax return, Don is considered not eligible for the employer coverage for 2016 because the Marketplace estimated that the employer coverage would cost more than 9.66% of Don's household income. Don can get the PTC if he otherwise qualifies.

Example 4. Hal was eligible for employer coverage for 2016. His required contribution for self-only coverage was $3,400, and Hal enrolled in the coverage. His household income for 2016 was $33,000, which means that his required contribution was more than 9.66% of his household income. Even though the employer coverage was not affordable, Hal cannot get the PTC for coverage in a qualified health plan because he enrolled in the employer coverage.

Example 5. Elsa is married and has 2 dependent children. Her household income for 2016 was $39,000. Elsa's employer offered only self-only coverage to employees. No family coverage was offered. The plan had a required contribution of $3,000 for self-only coverage for 2016 (7.7% of Elsa's household income) and provided minimum value. Because Elsa's required contribution for self-only coverage was not more than 9.66% of household income, her employer's plan is considered affordable for Elsa. Thus Elsa is considered eligible for the employer coverage for 2016 and cannot get the PTC for coverage in a qualified health plan. However, because Elsa's employer did not offer coverage to Elsa's spouse and children, Elsa could take the PTC for her spouse and 2 children if they enrolled in a qualified health plan and otherwise qualify.

Example 6. The facts are the same as in Example 5, except that Elsa's employer also offers coverage to Elsa's spouse and children. The premiums for family coverage cost $6,900 (17.7% of Elsa's household income). Because the required contribution for self-only coverage was not more than 9.66% of Elsa's household income, the employer coverage is considered affordable for Elsa and her family. Elsa could not take the PTC for anyone in her family.

Determining affordability for part-year period. If you are employed for part of a year or employed by different employers during the year, you determine whether your coverage is affordable by looking separately at each coverage period that is less than a full calendar year. For each period, the coverage is affordable if your required contribution for the entire year would not be more than 9.66% of your household income for the year.

Example. Elvis was enrolled in a qualified health plan without APTC beginning in January 2016. He began working for a new employer in May that offers health insurance coverage with a calendar year plan year. Elvis' required contribution for the employer coverage for the remainder of the year was $200/month, which would be $2,400 for the full plan year. Elvis does not enroll in the employer coverage or inform the Marketplace of the offer of employer coverage. Elvis' household income for the year is $20,000. Elvis' employer coverage is considered unaffordable for the period May through December because his required contribution for the full plan year, $2,400, is more than 9.66% of his household income. As a result, Elvis could take the PTC for May through December if he otherwise qualifies.

Coverage year not a calendar year. If your employer's plan year is not the calendar year and you are a calendar year taxpayer, you determine whether your coverage is affordable by looking separately at the portion of the calendar year in each plan year. A coverage period in 2016 that falls in a plan year beginning in 2015 is considered affordable if your required contribution for the entire plan year is not more than 9.56% of your household income for 2016. A coverage period in 2016 that falls in a plan year beginning in 2016 is considered affordable if your required contribution for the entire plan year is not more than 9.66% of your household income for 2016.

Example 1. Tim's employer offers health insurance coverage with a plan year of July 1 - June 30. His required contribution for the plan year that began on July 1, 2015, was $250 per month ($3,000 for the entire plan year). Tim enrolled in a qualified health plan on January 1, 2016, and did not apply for APTC. Tim's household income for 2016 is $30,000. Tim's required contribution for the plan year, $3,000, is 10% of his household income for 2016. Because 10% is more than 9.56% (the required contribution percentage for the plan year beginning in 2015), Tim's employer coverage for January 1, 2016 - June 30, 2016, is not considered affordable, and Tim can take the PTC for those months if he is otherwise eligible.

For the plan year that began on July 1, 2016, Tim's required contribution was reduced to $200 per month (or $2,400 for the entire plan year). Tim's required contribution of $2,400 is 8% of his 2016 household income. Because 8% is not more than 9.66% (the required contribution percentage for the plan year beginning in 2016), Tim's employer coverage for July 1, 2016 - December 31, 2016, is considered affordable and he is not eligible for the PTC for those months.

Example 2. Maria's employer offers health insurance coverage with a plan year of September 1 - August 31. Maria's required contribution for the employer coverage for the plan year September 1, 2016 - August 31, 2017, is $3,700. Maria's household income for 2016 is $37,000. Maria's employer coverage is considered unaffordable for the period September 1 - December 31, 2016, because her required contribution for the plan year, $3,700, is more than 9.66% of her 2016 household income. If Maria enrolls in a qualified health plan for 2017 and requests APTC, the Marketplace will determine whether the employer coverage is considered affordable for the period January 1, 2017 - August 31, 2017, by comparing Maria's required contribution for the plan year beginning in 2016, $3,700, to her estimated 2017 household income.

How to determine if a plan provides minimum value. An employer-sponsored plan provides minimum value only if the plan pays at least 60% of the total allowed costs of benefits for a standard population and provides substantial coverage of inpatient hospitalization services and physician services. A plan meets the 60% rule only if an employee's expected cost-sharing (deductibles, co-pays, and co-insurance) under the plan is no more than 40% of the cost of the benefits. This percentage is based on actuarial principles using benefits provided to a standard population and is not based on what you actually pay for cost-sharing.

Your employer must provide you with a summary of benefits and coverage (SBC) on or before the first day of the open enrollment period for the plan you are enrolled in for the current coverage period. The employer also must provide you with SBCs you request for other plans in which you can enroll. If you are not enrolled in a plan, the employer must provide you with the SBCs for all plans in which you can enroll. The SBC will tell you whether an employer-sponsored plan provides minimum value. If your employer sent you a Form 1095-C, line 14 of that form will include an indicator code telling you if your employer offered you a health plan in the previous year that provided minimum value.

Grandfathered Health Plan

A grandfathered health plan means any group health plan, group health insurance coverage, or individual health insurance coverage to which section 1251 of the Affordable Care Act applies (in general, certain group health plans and health insurance coverage existing as of March 23, 2010, for as long as the coverage maintains that status under the applicable rules). Health plans must disclose if they are grandfathered. For more information about grandfathered health plans, see http://www.healthcare.gov/health-care-law-protections/grandfathered-plans/.

Other Coverage Designated by the Department of Health and Human Services

The Department of Health and Human Services has designated the following health benefit plans or arrangements as minimum essential coverage.

Individuals Not Lawfully Present in the United States Enrolled in a Qualified Health Plan

The PTC is not allowed for the coverage of an individual who is not lawfully present in the United States. All APTC paid for an individual not lawfully present who enrolls in a qualified health plan must be repaid. If all family members enrolled in a qualified health plan are not lawfully present, see the discussion immediately below. If you or a member of your family is not lawfully present and was enrolled in a qualified health plan with family members who are lawfully present for one or more months of the year, you must use the instructions under Lawfully Present and Not Lawfully Present Family Members Enrolled, later, to find out how much APTC, if any, you must repay.

TIP: For more information about who is treated as lawfully present for this purpose, visit http://www.healthcare.gov/immigrants/immigration-status/.

All Enrolled Family Members Not Lawfully Present

If all family members enrolled in a qualified health plan are not lawfully present, no PTC is allowed and all APTC must be repaid. Complete lines on Form 8962 as explained below. Leave all other lines blank.

Lines 1, 2a, 3, 4, and 5. Enter -0-.

Line 9. Complete line 9 as provided in the Form 8962 instructions to determine whether you must complete Part IV for an allocation of policy amounts. Complete Part IV if instructed to do so by Table 3 of the Form 8962 instructions. Do not complete Part V.

Line 11(f) (or lines 12-23, column (f), if you complete Part IV). If you checked the "No" box on line 9, enter the total of your Form(s) 1095-A, Part III, line 33C, on line 11 (f). If you checked the "Yes" box on line 9, complete lines 12-23, column (f), as provided in the Form 8962 instructions.

Line 24. Enter -0-.

Lines 25, 27, and 29. Enter the amount from line 11(f) (or the total of lines 12-23, column (f)) on each line. Then follow the instructions on line 29 about entering the amount from line 29 on your 1040A, or 1040NR.

Lawfully Present and Not Lawfully Present Family Members Enrolled

TIP: Before you read the following discussion, first familiarize yourself with the definitions of tax family and coverage family discussed under Terms You May Need To Know, earlier.

If you or a member of your family is not lawfully present and was enrolled in a qualified health plan with family members who are lawfully present for one or more months of the year, you may take the PTC only for the coverage of the lawfully present family members. You must determine how much APTC was paid for the coverage of a not lawfully present family member and repay that amount. Complete Form 8962 using the following steps.

Step 1. Complete Part I according to the instructions. If you are instructed to repay the APTC paid for all individuals included in your tax family (for example because you entered 401% on line 5), skip the rest of these steps, complete Form 8962 through line 27, and then see How To Determine the Excess APTC That Must Be Repaid, later.

Step 2. Determine your monthly enrollment premiums and applicable SLCSP premium using the instructions under How To Determine Your Monthly Enrollment Premiums and SLCSP Premium, later.

Step 3. Complete line 9, including Parts IV and V if instructed to do so.

Step 4. If Situation 1 (discussed later) applies to you, do one of the following:

See Situation 1 or Situation 2 next for how to determine your monthly enrollment premium and applicable SLCSP premium.

Situation 1 - Not lawfully present family members enrolled and no other changes in enrollment or coverage family. Situation 1 applies if you have family members who are not lawfully present that are enrolled for all or a part of the year, there are no changes in your coverage family during the year (counting only lawfully present family members), and there are no enrollment changes involving your lawfully present family members enrolled in the coverage during the year. If Situation 1 applies, you should enter on Form 8962 for every month of the year the enrollment premiums and applicable SLCSP premium the Marketplace reports on Form 1095-A for the months when only lawfully present individuals were enrolled in the coverage. If a not lawfully present family member was enrolled for the entire year, see No reference month, later.

Example 1. Andrew enrolls himself and his three dependents, Terri, Phil and Anne in a qualified health plan. Anne is not lawfully present in the United States. The monthly enrollment premiums for the plan are $1,000. No one in Andrew's family is eligible for minimum essential coverage (other than Marketplace coverage) and the applicable SLCSP premium that would apply to all four members of Andrew's family is $1,200. There are no changes involving the lawfully present members of the coverage family during the year. Anne is disenrolled from coverage as of April 1. The monthly enrollment premiums for Andrew and his other two dependents are $800 and the applicable SLCSP premium that applies to Andrew's coverage family of 3 is $900. The Marketplace reports the following amounts on Form 1095-A, Part III.

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Situation 2 - Changes in enrollment or coverage family involving a lawfully present family member. Situation 2 applies if you have family members who are not lawfully present that are enrolled for all or part of the year, and there are either changes in your coverage family during the year (counting only lawfully present family members) or enrollment changes involving your lawfully present family members enrolled in the coverage during the year. If Situation 2 applies, use these rules to determine the enrollment premiums and the applicable SLCSP premium for the months any not lawfully present family members are enrolled. First, use Worksheet A, later, to determine if you have a reference month for enrollment premiums or for the applicable SLCSP premium. You may have a reference month for enrollment premiums (discussed next) or a reference month for the applicable SLCSP premium (discussed below), or for both.

Reference month for enrollment premiums. A reference month for enrollment premiums is a month in which the not lawfully present family member is not enrolled in coverage and there are no other changes in the members of your family who are enrolled in the coverage. In other words, your enrolled family members are the same during the reference month as for a month the not lawfully present member was enrolled, except that the not lawfully present family member is not enrolled. Enter on Form 8962, Part II, column (a), the enrollment premiums for the reference month as the enrollment premiums for the months the not lawfully present family member was enrolled.

Reference month for SLCSP premium. A reference month for the applicable SLCSP premium is a month in which the not lawfully present family member is not enrolled in coverage and there are no other changes in your coverage family. In other words, your coverage family is the same during the reference month as for a month the not lawfully present family member was enrolled, except the not lawfully present family member is not included in your coverage family. Enter on Form 8962, Part II, column (b), the applicable SLCSP premium for the reference month as the applicable SLCSP premium for the months the not lawfully present family member was enrolled.

No reference month. If you do not have a reference month for enrollment premiums, you may have to contact your insurance company to find out what the amount of the enrollment premiums would have been if the policy had covered only lawfully present family members. If you do not have a reference month for the applicable SLCSP premium, you must look up the SLCSP premium that applies to your coverage family (without any not lawfully present family members). See Determining the Premium for the Applicable Second Lowest Cost Silver Plan (SLCSP), later.

TIP: You may use Worksheet A, later, to determine whether or not you have any reference months.

Example 2. The facts are the same as in Example 1, earlier, except that Andrew becomes eligible for employer-sponsored coverage on September 1, notifies the Marketplace, but remains enrolled in the qualified health plan (although he cannot take the premium tax credit for his coverage for the months after August). The applicable SLCSP premium that applies to Terri and Phil only is $400. The Marketplace reports the following amounts on Form 1095-A, Part III.

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Example 3. The facts are the same as in Example 1, earlier, except that Andrew becomes eligible for employer-sponsored coverage on April 1, notifies the Marketplace, but remains enrolled in the qualified health plan. The Marketplace reports the following amounts on Form 1095-A, Part III.

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April through December are reference months for Andrew for enrollment premiums because the family members who are enrolled for those months are the same family members who were enrolled in January through March, except for Anne.

Therefore, for the months January through March, Andrew enters on Form 8962, lines 12-23, $800 (the enrollment premiums for April through December) in column (a) and $900 (the SLCSP premium that would apply to the coverage family of Andrew, Terri, and Phil) in column (b).

Worksheet A. Do You Have Any Reference Months?

 Note. Use this worksheet to determine whether or not you have

Worksheet B. Excess APTC That Must Be Repaid

 Note. Complete columns only for the months a not lawfully present

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Step 2. Andrew determines his monthly enrollment premiums and applicable SLCSP premium using the instructions under How to Determine Your Monthly Premium and Applicable SLCSP Premium, earlier. Situation 2 in that discussion applies to Andrew because he has a lawfully present family member enrolled in coverage and there are changes in his coverage family in 2016, counting only lawfully present family members: Beginning in September, only Phil and Terri are in the coverage family. Andrew is no longer in the coverage family because he becomes eligible for employer-sponsored coverage.

Andrew completes Worksheet A as explained below to determine his reference months for the enrollment premiums and the applicable SLCSP premium for the months Anne was enrolled. (Andrew's Worksheet A is shown later.)

Line 1. He checks the boxes for January, February, and March because those are the months in which Anne is enrolled in Marketplace coverage.

Line 2. He checks the boxes for April through December. Those months are reference months for enrollment premiums ($800) for January - March because his tax family for these months (Andrew, Phil and Terri) is the same as for January - March except for Anne.

Line 3. He checks the boxes for April - August. These months are reference months for the applicable SLCSP premium ($900) for January - March because Andrew's coverage family for these months (Andrew, Phil and Terri) is the same as for January - March except for Anne. September - December are not reference months for the applicable SLCSP premium (and Andrew doesn't check these boxes) because, as explained above, there was another change in his coverage family beginning in September.

Step 3. Andrew checks the "No" box on line 9 because he is neither allocating policy amounts with another taxpayer nor using the alternative calculation for year of marriage.

Step 4. Because Situation 2 discussed earlier applies to Andrew, he checks the "No" box on line 10, skips line 11, and completes lines 12-25. On lines 12-14, column (a), he enters $800 as determined in Worksheet A, line 2. On lines 12-14, column (b), he enters $900 as determined in Worksheet A, line 3.

Andrew's PTC on line 24 ($3,896) is less than his APTC on line 25 ($6,736), and his excess APTC on line 27 ($2,840) is greater than his Table 5 repayment limitation amount ($1,500). According to the instructions under How To Determine the Excess APTC That Must Be Repaid, earlier, Andrew must complete Worksheet B (shown later) to figure the amount of excess APTC he must repay.

Andrew completes Worksheet B as follows:

Line 1. Andrew enters $953. This is the monthly APTC shown on Form 1095-A, Part III, column C for January, February, and March (the months that Anne was enrolled in coverage).

Line 2. Andrew enters $487. This is the amount from Form 8962, Part II, column (e), for January - March and represents the applicable monthly SLCSP premium for April - August (reference months for the applicable SLCSP premium) for Andrew, Terri, and Phil of $900 minus the monthly contribution amount of $413 from Form 8962, line 8b.

Line 4. Andrew enters $1,000. This is the monthly premium for January - March shown on Form 1095-A, Part III, column A.

Line 5. Andrew enters $1,200. This is the applicable SLCSP premium shown on Form 1095-A, Part III, column B.

Line 6. Andrew enters $413. This is the monthly contribution amount from Form 8962, line 8b.

Lines 7-14. Andrew completes these lines as instructed on Worksheet B.

Line 15. Line 14 is more than line 13. Accordingly, Andrew enters the amount from line 13 ($2,400) on Form 8962, lines 28 and 29.

Andrew's Worksheet A. Do You Have Any Reference Months?

 Note. Use this worksheet to determine whether or not you have any

 Note. Complete columns only for the months a not lawfully present

If you file an income tax return but claim no personal exemptions for yourself, your spouse, and dependents, your tax family size is 0 and you cannot take the PTC. You must repay the APTC for which you are responsible. Complete your name and social security number and the lines on Form 8962 as explained below. Leave all other lines blank.

Note. If you enrolled yourself or another person in a qualified health plan and APTC was paid for the coverage, the taxpayer claiming a personal exemption for the person enrolled must reconcile the APTC. See Line 9 in the Form 8962 instructions. If you enrolled only yourself and another taxpayer claims you as a dependent, you do not have to file Form 8962. If you enrolled yourself or another person and no one else claims a personal exemption for the person enrolled, you must file Form 8962 and reconcile the APTC.

Lines 1, 2a, 3, 4, and 5. Enter -0-.

Line 9. Complete line 9 as provided in the Form 8962 instructions to determine whether you must complete Part IV for an allocation of policy amounts. Complete Part IV if instructed to do so by Table 3 of the Form 8962 instructions. Do not complete Part V.

Line 11(f) (or lines 12-23, column (f), if you complete Part IV). If you checked the "No" box on line 9, enter the total of your Form(s) 1095-A, Part III, line 33C, on line 11(f). If you checked the "Yes" box on line 9, complete lines 12-23, column (f), as provided in the Form 8962 instructions.

Lines 25, 27, and 29. Enter the amount from line 11(f) (or the total of lines 12-23, column (f)) on lines 25, 27, and 29 and follow the instructions on line 29.

Example 1. Jeff enrolls himself in a qualified health plan for 2016. The Form 1095-A he received from the Marketplace shows that APTC of $4,000 was paid for his coverage. Jeff files an income tax return on Form 1040A for 2016 and claims no personal exemptions. Jeff completes Form 8962 as follows.

Lines 1, 2a, 3, 4, and 5. Jeff enters -0-.

Line 9. Jeff checks the "No" box.

Lines 11(f), 25, 27, and 29. Jeff enters $4,000 APTC on these lines and on line 29 of his Form 1040A.

Example 2. Mark enrolls himself and his child, Donna, in a qualified health plan with coverage effective for all of 2016. The Form 1095-A he received from the Marketplace shows that $6,000 of APTC was paid for their coverage ($500 is entered in Part III, column C, for each of lines 21-32). Mark files an income tax return for 2016 on Form 1040 and claims no personal exemptions. Mark's parents, Steve and Sherry, claim a personal exemption for Mark. No one claims a personal exemption for Donna. Because Mark enrolled Donna in coverage and no one claims a personal exemption for Donna, Mark must reconcile the APTC paid for Donna's coverage. Steve and Sherry must reconcile the APTC paid for Mark's coverage. Because Steve and Sherry must reconcile the APTC paid for Mark's coverage and Mark must reconcile the APTC paid for Donna's coverage, Mark must complete Part IV of Form 8962 to allocate policy amounts with Steve and Sherry. Mark, Sherry, and Steve do not agree on an allocation percentage. Mark completes Form 8962 as follows.

Lines 1, 2a, 3, 4, and 5. Mark enters -0-.

Line 9. Mark reads Allocating policy amounts under Line 9 in the Form 8962 instructions. Because he meets both conditions in that discussion, he checks "Yes" on line 9. Then he reads Table 3 in the instructions. According to Step 3 in Table 3, he must allocate in Part IV using the rules under Allocation Situation 4. Other situations where a policy is shared between two tax families in the Form 8962 instructions.

Line 30 (Part IV). Mark enters the Marketplace assigned policy number in column a, Steve's social security number in column b, "01" in column c, and "12" in column d. He leaves columns e and f blank because he is not an applicable taxpayer. He enters "0.50" in column g. This is the allocation percentage based on the rules under Allocation Situation 4. Other situations where a policy is shared between two tax families in the Form 8962 instructions.

Lines 12-23, column (f). Mark enters $250 on each line (0.50 × the $500 APTC shown on his Form 1095-A).

Lines 25, 27, and 29. Mark enters $3,000 APTC, which is the total of lines 12-23, column (f), on these lines and on line 46 of his Form 1040.

Determining the Premium for the Applicable Second Lowest Cost Silver Plan (SLCSP)

If you or a member of your family enrolls in a qualified health plan and APTC is paid for the coverage, the Marketplace will generally identify the applicable SLCSP premium and report it on Form 1095-A. The Marketplace determines the applicable SLCSP premium based on your address and the members of your coverage family. Providing correct information on your application for financial assistance and notifying the Marketplace if you move or the members of your coverage family change is necessary for the Marketplace to report a correct applicable SLCSP premium. If the Marketplace does not have accurate and updated information, the applicable SLCSP premium the Marketplace reports on Form 1095-A may not be accurate for all months and you will need to determine the correct applicable SLCSP premium for those months. See Applicable SLCSP premium tools, below.

If you did not request financial assistance (APTC) and the Marketplace has an applicable SLCSP premium tool (discussed in the next paragraph), the Marketplace will not report an applicable SLCSP premium (Part III, column B, will report 0 or be blank). If you did not request financial assistance (APTC) and the Marketplace does not have an applicable SLCSP premium tool, it may report a SLCSP premium that applies to everyone enrolled in your qualified health plan because it may not be able to identify the members of your coverage family from the information on your application. If you take the PTC on your tax return, you will need to determine the SLCSP premium that applies to your coverage family for each month of coverage.

Applicable SLCSP premium tools. Only the Marketplaces are able to provide applicable SLCSP premiums. The Federally-facilitated Marketplace and most state Marketplaces have provided applicable SLCSP premium tools which, as you prepare your tax return, you may use to look up the SLCSP premium that applies to your coverage family for each month. If you enrolled through the Federally-facilitated Marketplace you will find the tool at https://http://www.healthcare.gov/tax-tool/.

If you enrolled through a state-based Marketplace, you may find information about whether your state has an applicable SLCSP premium tool on the state-based Marketplace's website. If the website does not have an applicable SLCSP premium tool, you will need to contact the state-based Marketplace directly for the correct SLCSP premium.

Allocation of Policy Amounts Among Three or More Taxpayers

This section covers allocations of policy amounts (enrollment premiums, applicable SLCSP premiums, and APTC) among three or more taxpayers.

Before you read this section, first read Part IV-Allocation of Policy Amounts in the Form 8962 instructions. Then use the following instructions to complete Part IV of Form 8962 if one qualified health plan covers individuals from three or more tax families in the same month. Specifically, these instructions apply to:

Allocation Among Two Taxpayers Who Divorced or Legally Separated in 2016 and One or More Other Taxpayers

Use this section to allocate policy amounts from a qualified health plan if you meet either of the following conditions and no other allocations for the policy are necessary.

Kara and David use the allocation method under Rules for the Taxpayers Who Divorced or Legally Separated in 2016 and Are Also Allocating With Another Taxpayer, next.

Lydia uses the allocation method under Rules for the Taxpayer(s) Allocating With Taxpayers Who Divorced or Legally Separated in 2016, later.

Rules for the Taxpayers Who Divorced or Legally Separated in 2016 and Are Also Allocating With Another Taxpayer

Use this allocation method if you divorced or legally separated during the year and you must allocate policy amounts (enrollment premiums, applicable SLCSP premiums, and APTC) with your former spouse as well as with another taxpayer claiming a personal exemption for an individual enrolled in a qualified health plan with members of your and your former spouse's tax families.

Step 1. Determine an allocation percentage with your former spouse. You use this percentage to allocate the total enrollment premiums, the applicable SLCSP premiums, and APTC for coverage under the plan during the months you were married. You will find these amounts on your Form(s) 1095-A, Part III, columns A, B, and C, respectively. You and your former spouse can allocate these amounts using any percentage you agree on from zero to one hundred percent, but you must allocate all amounts using the same percentage. If you do not agree on a percentage, you and your former spouse must allocate 50% of each of these amounts to each of you.

Step 2. Separately from the first allocation, determine an allocation percentage with the taxpayer(s) claiming the personal exemption(s) for the individual(s) enrolled in the plan with a member of your tax family or a member of your former spouse's tax family. You may agree on any allocation percentage from zero to one hundred percent. You may use the percentage you agreed on for every month that this allocation rule applies, or you may 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 you cannot agree on an allocation percentage, the allocation percentage is equal to the number of individuals for whom the other taxpayer claims a personal exemption for the tax year who were enrolled in the plan for which you are allocating policy amounts, divided by the total number of individuals enrolled in the qualified health plan. The allocation percentage is the percentage that applies to the amounts the taxpayer claiming the personal exemption must use to compute PTC and reconcile it with APTC. You and your former spouse must compute PTC and reconcile APTC using the remaining amounts.

Step 3. Complete Worksheet C below.

Worksheet C. Allocations for the Divorced or Legally Separated Taxpayers

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Column (a). Enter the Marketplace-assigned policy number from Form 1095-A, line 2. If the policy number on the Form 1095-A is more than 15 characters, enter only the last 15 characters.

Column (b). Enter the SSN of your former spouse.

Column (c). Enter the first month you are allocating policy amounts. For example, if you are allocating a percentage from January through June, enter "01" in column (c).

Column (d). Enter the last month you are allocating policy amounts. For example, if you are allocating a percentage from January through June, enter "06" in column (d).

Column (e). Enter the decimal from Worksheet C, line 5.

Column (f). Enter the decimal from Worksheet C, line 5.

Column (g). Enter the decimal from Worksheet C, line 5.

Rules for the Taxpayer(s) Allocating With Taxpayers Who Divorced or Legally Separated in 2016

Use this allocation method if you are claiming the personal exemption for one or more individuals who were enrolled in a qualified health plan with members of the tax families of taxpayers who also must allocate policy amounts as a result of divorce or legal separation in 2016.

Step 1. Determine an allocation percentage with one of the former spouses. You may agree on any allocation percentage from zero to one hundred percent. You may use the percentage you agreed on for every month during which this allocation rule applies, or you may 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 you cannot agree on an allocation percentage, the allocation percentage is equal to the number of individuals for whom you claim a personal exemption for the tax year who were enrolled in the qualified health plan for which you are allocating policy amounts, divided by the total number of individuals enrolled in the plan. The allocation percentage is the percentage that applies to the amounts you must use to compute PTC and reconcile it with APTC. The former spouse must compute PTC and reconcile APTC using the remaining amounts.

Step 2. Allocate the policy amounts with the second former spouse using the same rules as Step 1 above. Enter the percentage on line 4 of Worksheet D.

Step 3. Complete Worksheet D below.

Worksheet D. Taxpayer Allocating with Divorced or Separated Taxpayers

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Column (a). Enter the Marketplace-assigned policy number from Form 1095-A, line 2. If the policy number on the Form 1095-A is more than 15 characters, enter only the last 15 characters.

Column (b). Enter the SSN of the former spouse whose percentage you entered in Worksheet D, line 1.

Column (c). Enter the first month you are allocating policy amounts. For example, if you are allocating a percentage from January through June, enter "01" in column (c).

Column (d). Enter the last month you are allocating policy amounts. For example, if you are allocating a percentage from January through June, enter "06" in column (d).

Column (e). Enter the decimal from Worksheet D, line 7.

Columns (f) and (g). Enter the decimal from Worksheet D, line 7.

Example 1. Kara and David were married at the beginning of 2016 and have two children, Meredith and Sam. Kara enrolled herself, David, Meredith, and Sam in a qualified health plan with coverage effective January 1. For each month of coverage the enrollment premiums were $700, the applicable SLCSP premium for a coverage family of four was $650, and the APTC was $425.

Meredith and Sam moved in with their grandmother, Lydia, in May. Kara and David divorced in September. Kara enrolled in a new qualified health plan for self-only coverage. David became eligible for and enrolled in employer-sponsored self-only coverage. Meredith and Sam became eligible for and enrolled in government-sponsored coverage. All of the new plans have coverage effective October 1. Lydia is enrolled in employer-sponsored coverage.

On their respective tax returns, Kara files as single and claims only her own personal exemption, David files as single and claims only his own personal exemption, and Lydia files as head of household and claims personal exemptions for Meredith and Sam.

Under Step 1 of Rules for the Taxpayers Who Divorced or Legally Separated in 2016 and Are Also Allocating With Another Taxpayer, Kara and David agree to allocate the policy amounts 30% to Kara and 70% to David. Under Step 2 of that method (Kara, David) and under Rules for the Taxpayer(s) Allocating With Taxpayers Who Divorced or Legally Separated in 2016 (Lydia), Kara and Lydia agree to allocate 80% of the policy amounts to Lydia, and David and Lydia agree to allocate 50% of the policy amounts to Lydia. Each of them completes a worksheet as shown below and uses it to complete Part IV.

Kara completes Worksheet C as follows.

Kara's Worksheet C. Allocations for Divorced or Legally Separated Taxpayers

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Column (a). Kara enters the Marketplace-assigned policy number from Form 1095-A, line 2.

Column (b). Kara enters David's SSN.

Column (c). Kara enters "01."

Column (d). Kara enters "09."

Columns (e), (f), and (g). Kara enters "0.06."

After completing Part IV, Kara multiplies the amounts from Form 1095-A, Part III, by the corresponding percentages in Part IV, and enters these allocated amounts on Form 8962, lines 12-20, columns (a), (b), and (f). On each of those lines she will enter $42 in column (a) (enrollment premiums of $700 × 0.06), $39 in column (b) (applicable SLCSP premium of $650 × 0.06), and $26 in column (f) (APTC of $425 × 0.06). She completes her Form 8962, lines 21-23, columns (a), (b), and (f), by entering the monthly amounts from her separate Form 1095-A for her self-only coverage from October through December. She does not allocate those amounts.

David completes Worksheet C as follows.

David's Worksheet C. Allocations for Divorced or Legally Separated Taxpayer

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Column (a). David enters the Marketplace-assigned policy number from Form 1095-A, line 2.

Column (b). David enters Kara's SSN.

Column (c). David enters "01."

Column (d). David enters "09."

Columns (e), (f), and (g). David enters "0.35."

After completing Part IV, David multiplies the amounts from Form 1095-A, Part III, by the corresponding percentages in Part IV, and enters these allocated amounts on Form 8962, lines 12-20, columns (a), (b), and (f). On each of those lines he will enter $245 in column (a) (enrollment premiums of $700 × 0.35), $228 in column (b) (applicable SLCSP premium of $650 × 0.35), and $149 in column (f) (APTC of $425 × 0.35). David leaves Form 8962, lines 21-23 blank because he was not enrolled in a qualified health plan during October through December.

Lydia completes Worksheet D as follows.

Lydia's Worksheet D. Taxpayer Allocating with Divorced or Legally Separated Taxpayers

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Column (a). Lydia enters the Marketplace-assigned policy number from Form 1095-A, line 2.

Column (b). Lydia enters Kara's SSN.

Column (c). Lydia enters "01."

Column (d). Lydia enters "09."

Columns (e), (f), and (g). Lydia enters "0.59."

After completing Part IV, Lydia multiplies the amounts from Form 1095-A, Part III, by the corresponding percentages in Part IV, and enters these allocated amounts on Form 8962, lines 12-20, columns (a), (b), and (f). On each of those lines she will enter $413 in column (a) (enrollment premiums of $700 × 0.59), $384 in column (b) (applicable SLCSP premium of $650 × 0.59), and $251 in column (f) (APTC of $425 × 0.59). Lydia leaves Form 8962, lines 21-23 blank because she, Meredith, and Sam were not enrolled in a qualified health plan during October through December.

Example 2. The facts are the same as Example 1 except that in May, Meredith moved in with her grandmother, Lydia, and Sam moved in with his aunt, Kimberly.

On their respective tax returns, Kara files as single and claims only her own personal exemption, David files as single and claims only his own personal exemption, Lydia files as head of household and claims Meredith's personal exemption, and Kimberly files as head of household and claims Sam's personal exemption. Kimberly is enrolled in employer-sponsored coverage.

Under Step 1 of Rules for the Taxpayers Who Divorced or Legally Separated in 2016 and Are Also Allocating With Another Taxpayer, Kara and David agree to allocate the policy amounts 40% to Kara and 60% to David. Under Step 2 of that method (Kara, David) and under Rules for the Taxpayer(s) Allocating With Taxpayers Who Divorced or Legally Separated in 2016 (Lydia, Kimberly), Kara and Lydia agree to allocate 50% of the policy amounts to Lydia, and Kara and Kimberly agree to allocate 25% of the policy amounts to Kimberly. David and Lydia agree to allocate 20% of the policy amounts to Lydia, and David and Kimberly agree to allocate 25% of the policy amounts to Kimberly. Each of them completes a worksheet as shown below and uses it to complete Part IV.

Kara completes Worksheet C as follows.

Kara's Worksheet C. Allocations for Divorced or Legally Separated Taxpayer

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Column (a). Kara enters the Marketplace-assigned policy number from Form 1095-A, line 2.

Column (b). Kara enters David's SSN.

Column (c). Kara enters "01."

Column (d). Kara enters "09."

Columns (e), (f), and (g). Kara enters "0.10."

After completing Part IV, Kara completes her Form 8962 in the same manner described in Example 1 above, but applies the different allocation percentage.

David completes Worksheet C as follows.

David's Worksheet C. Allocations for Divorced or Legally Separated Taxpayer

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Column (a). David enters the Marketplace-assigned policy number from Form 1095-A, line 2.

Column (b). David enters Kara's SSN.

Column (c). David enters "01."

Column (d). David enters "09."

Columns (e), (f), and (g). David enters "0.33."

After completing Part IV, David completes his Form 8962 in the same manner described in Example 1 above, but applies the different allocation percentage.

Lydia completes Worksheet D as follows.

Lydia's Worksheet D. Taxpayer Allocating with Divorced or Legally Separated Taxpayers

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Column (a). Lydia enters the Marketplace-assigned policy number from Form 1095-A, line 2.

Column (b). Lydia enters Kara's SSN.

Column (c). Lydia enters "01."

Column (d). Lydia enters "09."

Columns (e), (f), and (g). Lydia enters "0.32."

After completing Part IV, Lydia completes her Form 8962 in the same manner as in Example 1 above, but applies the different allocation percentage.

Kimberly completes Worksheet D as follows.

Kimberly's Worksheet D. Taxpayer Allocating with Divorced or Legally Separated Taxpayers

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Column (a). Kimberly enters the Marketplace-assigned policy number from Form 1095-A, line 2.

Column (b). Kimberly enters Kara's SSN.

Column (c). Kimberly enters "01."

Column (d). Kimberly enters "09."

Columns (e), (f), and (g). Kimberly enters "0.25."

After completing Part IV, Kimberly completes her Form 8962 in the same manner described for Lydia in Example 1 above, but applies the different allocation percentage.

Allocation Among Taxpayers Who Are Married But Not Filing a Joint Return and One or More Other Taxpayers

Use this section if you meet either of the following conditions and no other allocations for the policy are necessary.

Pat and Jamie use the allocation method under Rules for the Married Taxpayers Not Filing a Joint Return and Also Allocating With Another Taxpayer, next.

Andy uses the allocation method under Rules for the Taxpayer(s) Allocating With Married Taxpayers Not Filing a Joint Return, later.

Rules for the Married Taxpayers Not Filing a Joint Return and Also Allocating With Another Taxpayer

Use this allocation method if you are married but not filing a joint return and you must allocate policy amounts with your spouse and with a taxpayer claiming a personal exemption for an individual enrolled in a qualified health plan with members of your and your spouse's tax families. Under this method, you must first allocate 50% each of enrollment premiums and APTC to yourself and your spouse. Line 4 of Worksheet E, later, accomplishes this 50% allocation. Complete the steps below to determine the amounts to enter on your Form 8962, Part IV.

Step 1. Determine the applicable SLCSP for your coverage family. See Determining the Premium for the Applicable Second Lowest Cost Silver Plan (SLCSP), earlier. For this purpose, your coverage family or your spouse's coverage family (but not both) should include the individuals for whom the other taxpayer is claiming personal exemptions and who was enrolled in a qualified health plan with your and your spouse's tax family members. Enter the applicable SLCSP premium you determined on line 5 of Worksheet E.

Step 2. Separately from the first allocation (the 50% spousal allocation), determine an allocation percentage with the taxpayer(s) claiming the personal exemption(s) for the individual(s) enrolled in the plan. You may agree on any allocation percentage from zero to one hundred percent. You may use the percentage you agreed on for every month in which this allocation rule applies, or you may 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 you cannot agree on an allocation percentage, the allocation percentage is equal to the number of individuals for whom the other taxpayer claims a personal exemption for the tax year who were enrolled in the qualified health plan for which you are allocating amounts, divided by the total number of individuals enrolled in the plan. The allocation percentage is the percentage that applies to the amounts the taxpayer claiming the personal exemption must use to compute PTC and reconcile it with APTC. You must compute PTC and reconcile APTC using the remaining amounts.

Step 3. Complete Worksheet E below.

Worksheet E. Allocations for Married Taxpayers Not Filing a Joint Return

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Column (a). Enter the Marketplace-assigned policy number from Form 1095-A, line 2. If the policy number on the Form 1095-A is more than 15 characters, enter only the last 15 characters.

Column (b). Enter the SSN of your spouse.

Column (c). Enter the first month you are allocating policy amounts. For example, if you are allocating a percentage from January through June, enter "01" in column (c).

Column (d). Enter the last month you are allocating policy amounts. For example, if you are allocating a percentage from January through June, enter "06" in column (d).

Column (e). If your filing status is married filing separately and you did not check the box in the top right-hand corner of Form 8962, leave column (e) blank. If you checked the box or Exception 1--Certain married persons living apart under Married taxpayers (discussed earlier under Terms You May Need To Know) applies to you, enter the decimal from line 4 of Worksheet E in column (e).

Column (f). If your filing status is married filing separately and you did not check the box in the top right-hand corner of Form 8962, leave column f blank. If you checked the box or Exception 1--Certain married persons living apart under Married taxpayers (discussed earlier under Terms You May Need To Know) applies to you, enter the decimal from line 3 of Worksheet E in column (f) and include the amount from line 6 of Worksheet E in the totals on the appropriate lines of Form 8962, column (b), for the months allocated.

Column (g). Enter the decimal from line 4 of Worksheet E.

Rules for the Taxpayer(s) Allocating With Married Taxpayers Not Filing a Joint Return

Use this allocation method if you are claiming a personal exemption for an individual who was enrolled in a qualified health plan with tax family members of taxpayers who also must allocate policy amounts because the taxpayers are legally married but not filing a joint return in 2016.

Step 1. Determine an allocation percentage with one of the spouses. You may agree on any allocation percentage from zero to one hundred percent. You may use the percentage you agreed on for every month in which this allocation rule applies, or you may 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 you cannot agree on an allocation percentage, the allocation percentage is equal to the number of individuals for whom you will claim a personal exemption for the tax year who were enrolled in the qualified health plan for which you are allocating policy amounts divided by the total number of individuals enrolled in the plan. The allocation percentage is the percentage that applies to the amounts you must use to compute PTC and reconcile it with APTC. The spouses must compute PTC and reconcile APTC using the remaining amounts. Enter the percentage as a decimal on line 1 of Worksheet F.

Step 2. Allocate the policy amounts with the second spouse using the same rules as Step 1 above. Enter the percentage as a decimal on line 3 of Worksheet F.

Step 3. Complete Worksheet F below.

Worksheet F. Taxpayer Allocating with Married Taxpayers Not Filing a Joint Return

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Column (a). Enter the Marketplace-assigned policy number from Form 1095-A, line 2. If the policy number on the Form 1095-A is more than 15 characters, enter only the last 15 characters.

Column (b). Enter the SSN of the spouse whose percentage you entered in Worksheet F, line 1.

Column (c). Enter the first month you are allocating policy amounts. For example, if you are allocating a percentage from January through June, enter "01" in column (c).

Column (d). Enter the last month you are allocating policy amounts. For example, if you are allocating a percentage from January through June, enter "06" in column (d).

Column (e). Enter the decimal from Worksheet F, line 5.

Column (f). Leave column (f) blank.

Column (g). Enter the decimal from Worksheet F, line 5.

Example. Pat and Jamie were married for all of 2016 and have three children, Jason, Alicia and Dawn. All five individuals enrolled in a qualified health plan and were covered for all of 2016. For each month of coverage, the enrollment premiums were $1,000, the premium for the applicable SLCSP for a coverage family of five was $800, and the APTC was $200. At enrollment, Pat and Jamie expected to file a joint return and claim personal exemptions for the children.

Jason, Alicia, and Dawn moved in with their uncle, Andy, in April. On their respective tax returns, Pat and Jamie file as married filing separately and each claim only their own personal exemption. Neither checks the box in the top right-hand corner of Form 8962. Andy files as head of household and claims personal exemptions for Jason, Alicia, and Dawn.

Pat and Jamie allocate the enrollment premiums and the APTC 50% to Pat and 50% to Jamie. Under Step 1 of Rules for the Married Taxpayers Not Filing a Joint Return and Also Allocating With Another Taxpayer, Pat and Jamie determine that Pat's coverage family will include Pat, Jason, and Alicia and that Jamie's coverage family will include Jamie and Dawn. Pat and Jamie each look up their applicable SLCSP premiums. The applicable SLCSP premium for Pat's coverage family of three is $450 and the applicable SLCSP premium for Jamie's coverage family of two is $400.

Under Step 2 of Rules for the Married Taxpayers Not Filing a Joint Return and Also Allocating With Another Taxpayer (Pat, Jamie) and under Rules for the Taxpayer(s) Allocating With Married Taxpayers Not Filing a Joint Return (Andy), Pat and Andy agree to allocate 67% of the policy amounts to Andy, and Jamie and Andy agree to allocate 50% of the policy amounts to Andy. Pat, Jamie, and Andy each complete a worksheet as shown below and use it to complete Part IV.

Pat completes Worksheet E as follows.

Pat's Worksheet E. Allocations for Married Taxpayers Not Filing a Joint Return

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Column (a). Pat enters the Marketplace-assigned policy number from Form 1095-A, line 2.

Column (b). Pat enters Jamie's SSN.

Column (c). Pat enters "01."

Column (d). Pat enters "12."

Column (e). Pat leaves this column blank.

Column (f). Pat leaves this column blank.

Column (g). Pat enters "0.17."

After completing Part IV, Pat multiplies the APTC from Form 1095-A, Part III, column C, by the percentage in Part IV, column (g), and enters $34 (APTC of $200 × 0.17) on Form 8962, lines 12-23, column (f). Pat leaves lines 12-23, columns (a)-(e), blank because he is not eligible to take the PTC.

Jamie completes Worksheet E as follows.

Jamie's Worksheet E. Allocations for Married Taxpayers Not Filing a Joint Return

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Column (a). Jamie enters the Marketplace-assigned policy number from Form 1095-A, line 2.

Column (b). Jamie enters Pat's SSN.

Column (c). Jamie enters "01."

Column (d). Jamie enters "12."

Column (e). Jamie leaves this column blank.

Column (f). Jamie leaves this column blank.

Column (g). Jamie enters "0.25."

After completing Part IV, Jamie multiplies the APTC from Form 1095-A, Part III, column C, by the percentage in Part IV, column (g), and enters $50 (APTC of $200 × 0.25) on Form 8962, lines 12-23, column (f). Jamie leaves lines 12-23, columns (a)-(e), blank because she is not eligible to take the PTC.

Andy completes Worksheet F as follows.

Andy's Worksheet F. Taxpayer Allocating with Married Taxpayers Not Filing a Joint Return

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Column (a). Andy enters the Marketplace-assigned policy number from Form 1095-A, line 2.

Column (b). Andy enters Pat's SSN.

Column (c). Andy enters "01."

Column (d). Andy enters "12."

Column (e). Andy enters "0.59."

Column (f). Andy leaves this column blank.

Column (g). Andy enters "0.59."

After completing Part IV, Andy multiplies the amounts from Form 1095-A, Part III, by the corresponding percentages in Part IV, and enters these allocated amounts on Form 8962, lines 12-23, columns (a), (b), and (f). On each of those lines he will enter $590 in column (a) (enrollment premiums of $1,000 × 0.59), $502 in column (b) (applicable SLCSP premium allocated to him on Worksheet F, line 12), and $118 in column (f) (APTC of $200 × 0.59).

Other Taxpayers Allocating Policy Amounts With Two or More Other Taxpayers

If you or another person in your tax family was enrolled in a qualified health plan with individuals in at least two other tax families and APTC was paid for coverage under the policy and you don't meet the rules for divorce or for married individuals filing separate returns, you and the taxpayers claiming the personal exemptions for the individuals not in your tax family should use the instructions for Form 8962 under Allocation Situation 4. Other situations where a policy is shared between two tax families to allocate amounts from the qualified health plan. There must be an allocation percentage for each taxpayer claiming a personal exemption for an individual who is enrolled in a qualified health plan with a member of your tax family. If you cannot agree on an allocation percentage with all taxpayers claiming personal exemptions for enrolled individuals, the allocation percentage for a particular taxpayer is equal to the number of individuals for whom the taxpayer will claim a personal exemption for the tax year who were enrolled in the qualified health plan for which you are allocating policy amounts, divided by the total number of individuals enrolled in the plan.

Example 1. Erik enrolled himself and his sons, Bill and Arvind, in a qualified health plan with coverage effective for all of 2016. For the year, the enrollment premiums were $8,000, the premium for the applicable SLCSP for a coverage family consisting of Erik, Bill, and Arvind was $9,000, and the APTC paid for their coverage was $4,500. In March, Bill dropped out of school to work full-time and moved permanently into his own apartment. In May, Arvind moved in with his mother Sharon, where he lived until the end of 2016. On their respective tax returns, Erik files as single and claims his own personal exemption, Bill files as single and claims his own personal exemption, and Sharon files as head of household and claims personal exemptions for herself and Arvind.

Erik and Bill agree to allocate 25% of the policy amounts to Bill. Erik and Sharon agree to allocate 40% of the policy amounts to Sharon. Erik allocates the remaining 35% of the policy amounts to himself.

Bill completes Form 8962, Part IV, line 30, as follows.

Column (a). Bill enters the Marketplace-assigned policy number from Form 1095-A, line 2.

Column (b). Bill enters Erik's SSN.

Column (c). Bill enters "01."

Column (d). Bill enters "12."

Columns (e), (f), and (g). Bill enters an allocation percentage of "0.25" in columns (e), (f), and (g).

After completing Part IV, Bill multiplies the amounts from Form 1095-A, Part III, by the corresponding percentages in Part IV, and enters these allocated amounts on his Form 8962, lines 12-23, columns (a), (b), and (f). The sum of his monthly entries will be $2,000 in column (a) (enrollment premiums of $8,000 × 0.25), $2,250 in column (b) (applicable SLCSP premium of $9,000 × 0.25), and $1,125 in column (f) (APTC of $4,500 × 0.25).

Sharon completes Form 8962, Part IV, line 30, as follows.

Column (a). Sharon enters the Marketplace-assigned policy number from Form 1095-A, line 2.

Column (b). Sharon enters Erik's SSN.

Column (c). Sharon enters "01."

Column (d). Sharon enters "12."

Columns (e), (f), and (g). Sharon enters an allocation percentage of "0.40" in columns (e), (f), and (g).

After completing Part IV, Sharon multiplies the amounts from Form 1095-A, Part III, by the corresponding percentages in Part IV, and enters these allocated amounts on Form 8962, lines 12-23, columns (a), (b), and (f). The sum of her monthly entries will be $3,200 in column (a) (enrollment premiums of $8,000 × 0.40), $3,600 in column (b) (applicable SLCSP premium of $9,000 × 0.40), and $1,800 in column (f) (APTC of $4,500 × 0.40).

Erik completes Form 8962, Part IV, line 30, as follows.

Column (a). Erik enters the Marketplace-assigned policy number from Form 1095-A, line 2.

Column (b). Erik enters either Bill's SSN or Sharon's SSN.

Column (c). Erik enters "01."

Column (d). Erik enters "12."

Columns (e), (f), and (g). Erik enters an allocation percentage of "0.35" in columns (e), (f), and (g), which is the percentage of policy amounts not allocated to Bill or Sharon.

After completing Part IV, Erik multiplies the amounts from Form 1095-A, Part III, by the corresponding percentages in Part IV, and enters these allocated amounts on his Form 8962, lines 12-23, columns (a), (b), and (f). The sum of his monthly entries will be $2,800 in column (a) (enrollment premiums of $8,000 × 0.35), $3,150 in column (b) (applicable SLCSP of $9,000 × 0.35), and $1,575 in column (f) (APTC of $4,500 × 0.35).

Example 2. The facts are the same as Example 1 except Erik and Bill cannot agree on an allocation percentage. Because Erik did not agree on an allocation percentage with all taxpayers claiming personal exemptions for individuals not in his tax family, Bill and Sharon determine their allocation percentages of 33% by dividing the number of enrolled individuals for whom each will claim a personal exemption (1 each for Bill and Sharon) by the number of individuals enrolled in the plan (3, Erik, Bill, and Arvind). Erik's allocation percentage is 34%, which is the percentage of policy amounts not allocated to Bill and Sharon. Each taxpayer completes Part IV as explained in Example 1 using these percentages.

Alternative Calculation for Year of Marriage

If you got married during 2016 and APTC was paid for an individual in your tax family, you may want to use the alternative calculation for year of marriage, an optional calculation that may reduce the amount of excess APTC you would have to repay under the general rules. Before you read this section, first read the instructions for line 9 in the instructions for Form 8962. Complete Table 4 and, if required, Worksheet 3 in those instructions. Then continue reading this section if you meet either of the following conditions.

If you are eligible, electing the alternative calculation may reduce the amount of excess APTC you have to repay. Electing the alternative calculation is optional. Worksheet V (shown later) will tell you whether the alternative calculation will benefit you.

Before you begin the steps, determine your alternative family size and your spouse's alternative family size using the instructions under Alternative Family Size, below. Then read Table A to determine which steps to complete.

Alternative Family Size

Alternative family size is used to determine an alternative monthly contribution amount (see Monthly contribution amount under Terms You May Need to Know, earlier) on Worksheets I and III, which may reduce the amount of excess APTC for the pre-marriage months that you must repay.

When determining your alternative family size, include yourself and any individual in the tax family who qualifies as your dependent for the year under the rules explained in the instructions for 1040A, line 6c, or Form 1040NR, line 7c. Do not include any individual who does not qualify as your dependent under those rules or who is included in your spouse's alternative family size.

When determining your spouse's alternative family size, include your spouse and any individual in the tax family who qualifies as your spouse's dependent for the year under the rules explained in the instructions for Form 1040 or 1040A, line 6c, or Form 1040NR, line 7c. Do not include any individual who does not qualify as your spouse's dependent under those rules or who is included in your alternative family size.

Note. You may include an individual who qualifies as the dependent of both you and your spouse in either alternative family size.

Example 1. Ron, Suzy, and their son Max have lived together since July 2015. Ron and Suzy got married in August 2016. Each of them had coverage under a qualified health plan for the months before September. Max qualifies as Ron's dependent under the rules explained in the instructions for Form 1040, line 6c. Max also qualifies as Suzy's dependent under those rules. Ron and Suzy can include Max in either alternative family size.

Example 2. Rob and his son Liam lived together from January through May 2016. On June 10, 2016, Rob married Tara. She moved in with Rob and Liam on June 11. Each of them had coverage under a qualified health plan for the months before July. Liam qualifies as Rob's dependent under the rules explained in the instructions for Form 1040, line 6c. Liam also qualifies as Tara's dependent under those rules. (Liam is Tara's stepchild and lived with Tara for more than half of 2016.) Rob and Tara can include Liam in either alternative family size.

Example 3. Stacey and her daughter Leia lived together from January through July 2016. Stacey married Vince in August 2016 and Vince moved in with Stacey and Leia. Each of them had coverage under a qualified health plan for the months before September. Leia qualifies as Stacey's dependent under the rules explained in the instructions for Form 1040, line 6c. Leia does not qualify as Vince's dependent under those rules because Leia did not live with Vince for more than half of 2016. Stacey must include Leia in her alternative family size. Vince cannot include Leia in his alternative family size.

Table A. Which Steps to Complete

 Note. Answer the following questions to determine which steps to

Step 1

Complete Worksheet I, later, if there is an individual included in your alternative family size who was enrolled in a qualified health plan for one or more of your pre-marriage months.

Worksheet for Line 4 of Worksheet I

 Note. Use this worksheet to figure the amount to enter on line 4 of

Note. For your pre-marriage months, if there were changes in your coverage family that you did not report to the Marketplace or APTC was not paid for the coverage, or there is an individual in your coverage family not included in Part II of the Form 1095-A sent to you who is included in your alternative family size, you may have to determine a new premium for your applicable SLCSP for those months. See Determining the Premium for the Applicable Second Lowest Cost Silver Plan (SLCSP), earlier.

Step 3

Complete Worksheet III, later, if there is an individual included in your spouse's alternative family size who was enrolled in a qualified health plan for one or more of your pre-marriage months.

Worksheet for Line 4 of Worksheet III

 Note. Use this worksheet to figure the amount to enter on line 4

Note. For your pre-marriage months, if there were changes in your spouse's coverage family that your spouse did not report to the Marketplace or APTC was not paid for the coverage, or there is an individual in your spouse's coverage family not included in Part II of the Form 1095-A sent to your spouse who is included in your spouse's alternative family size, your spouse may have to determine a new premium for the applicable SLCSP for those months. See Determining the Premium for the Applicable Second Lowest Cost Silver Plan (SLCSP), earlier.

Step 5

After you have completed Steps 1 and 2 and/or Steps 3 and 4, complete Worksheet V, later, to determine what entries you must make on Form 8962, lines 12-23, for your pre-marriage months.

Step 6

Complete Form 8962, lines 35 and 36 using the following instructions. Follow these instructions only if you checked the "Yes" box on Worksheet V, line 14.

Line 35.

Complete Form 8962, lines 12-23, columns (a)-(f), using the following instructions. Follow these instructions only if you checked the "Yes" box on Worksheet V, line 14.

Column (a). Enter the amounts from column (a) of Worksheet 3 in the Form 8962 instructions.

Column (b). Enter the amounts from column (b) of Worksheet 3 in the Form 8962 instructions.

Column (c). For pre-marriage months, enter the totals of Worksheet II, column C, and Worksheet IV, column C. For example, if you entered $200 on Worksheet II, column C, lines 1-5, and you entered $250 on Worksheet IV, column C, lines 3-5, enter $200 on lines 12 and 13, and $450 on lines 14-16 of Form 8962, column (c).

For the months you were married for the entire month, enter the amount from Form 8962, line 8b.

Column (d). Subtract column (c) from column (b) and enter the result. If zero or less, enter -0-.

Column (e). For your pre-marriage months, enter the amounts from lines 1-12, column A, of Worksheet V, later, in the boxes for the corresponding months in column (e).

For the months you were married for the entire month, enter the smaller of column (a) or (d).

Column (f). Enter the amounts from column (f) of Worksheet 3 in the Form 8962 instructions.

Step 8

Continue to Form 8962, line 24, and complete the rest of the form.

Line 26. Enter -0-.

Line 27-29. If line 24 is less than line 25, complete these lines. Otherwise, leave these lines blank.

Worksheet I. Your Alternative Monthly Contribution Amount

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In 2016, Paulette and Quentin were single and maintained separate residences until they got married on July 18.

Paulette has no dependents. She was enrolled in a qualified health plan from January 1 through July 31. The Health Insurance Marketplace sent her a Form 1095-A (shown later) showing her enrollment information for this 7-month period.

Quentin has 2 dependent children. He and his 2 children were enrolled in a qualified health plan from January 1 through July 31. The Health Insurance Marketplace sent him a Form 1095-A (shown later) showing his enrollment information for this 7-month period.

From August 1 through December 31, 2016, Paulette, Quentin, and Quentin's 2 dependent children were enrolled together in a different qualified health plan. The Health Insurance Marketplace sent them a Form 1095-A (shown later) showing their enrollment information for this 5-month period.

Paulette and Quentin first complete lines 1-8 of Form 8962. Then they read the instructions for line 9 and complete Table 4 and Worksheet 3 in the Form 8962 instructions and Worksheets I-V in this publication. Using the information in the worksheets and on Forms 1095-A, they complete lines 9-29, 35, and 36 of Form 8962.

Paulette's and Quentin's Form 8962, lines 1-11

Paulette and Quentin fill out Form 8962, lines 1-11, as follows.

Line 1. They enter "4" because this is the number of exemptions they entered on line 6d of their joint Form 1040A (not illustrated).

Line 2a. They enter $75,000, which they figured using Worksheet 1-1 (not illustrated) in the Form 8962 instructions.

Line 2b. They leave line 2b blank because neither of Quentin's dependent children is required to file a Federal income tax return.

Line 3. They enter $75,000, the sum of lines 2a and 2b.

Line 4. They enter $24,250 from Table 1-1 in the Form 8962 instructions. This is the Federal poverty line for a family size of 4. They also check box c on line 4.

Line 5. Using Worksheet 2 in the Form 8962 instructions, they divide line 3 ($75,000) by line 4 ($24,250) to get 309%.

Line 6. They check the "No" box because they did not enter 401 on line 5.

Line 7. They enter their applicable figure of .0966 from Table 2 in the instructions for Form 8962. According to the last line of the right column of Table 2, .0966 is the applicable figure if the amount on line 5 is from 300% to 400%.

Line 8a. They multiply line 3 ($75,000) by line 7 (.0966) and enter the result, $7,245.

Line 8b. They divide line 8a ($7,245) by 12 and enter the result, $604.

Line 9. Paulette and Quentin read the instructions for line 9, which explain that because they got married in 2016, they may be eligible to complete Part V to elect the alternative calculation for year of marriage. This calculation may reduce the amount of excess APTC they would otherwise have to repay.

The preliminary steps in determining whether they may be eligible is to complete Table 4 and Worksheet 3 in the Form 8962 instructions. (Both the table and worksheet for Paulette and Quentin are shown later.) Worksheet 3 shows that if Paulette and Quentin do not elect the alternative calculation, their total PTC will be $7,449 (line 13, column (e)). The excess APTC they will have to pay with their tax return is $974, which is the difference between $8,423 (APTC for the year on line 13, column (f)) and $7,449.

Because Paulette and Quentin checked the "Yes" box on line 14 of Worksheet 3, they complete Worksheets I through V in this publication to determine if the alternative calculation for year of marriage will benefit them. They complete Worksheets I through V before they check any of the boxes on line 9. As explained under Step 5 (Worksheet V) later, they qualify for the alternative calculation for year of marriage and check "Yes" on line 9.

Line 10. As explained under Step 5 (Worksheet V) later, they check "No" on line 10.

Line 11. Because Paulette and Quentin checked "No" on line 10, they skip line 11 and complete lines 12-23 to figure their monthly PTC.

Step 1 (Paulette's Worksheet I)

Line 1. They enter "1" as Paulette's alternative family size because she can include only herself. She can't include either of Quentin's children in her alternative family size because neither of them lived with her for more than half of 2016 and she could not claim them as dependents.

Lines 2-9. They complete these lines according to the instructions on the worksheet.

Step 2 (Paulette's Worksheet II)

They complete Worksheet II only for January through July (the month Paulette and Quentin got married). They complete columns A and B using the amounts shown on Paulette's Form 1095-A. They complete columns C-D according to the instructions shown on the worksheet.

Step 3 (Quentin's Worksheet III)

Line 1. They enter "3" as Quentin's alternative family size consisting of Quentin and his two dependent children.

Lines 2-9. They complete these lines according to the instructions on the worksheet.

Step 4 (Quentin's Worksheet IV)

They complete Worksheet IV only for January through July (the month Paulette and Quentin got married). They complete columns A and B using the amounts shown on Quentin's Form 1095-A. They complete columns C-D according to the instructions shown on the worksheet.

Step 5 (Worksheet V)

Quentin and Paulette complete Worksheet V only for the months they have entries in column E of Worksheets II and IV (January-July). They qualify for the alternative calculation for year of marriage because line 13, column A ($5,488), is more than line 13, column B ($4,634). Accordingly, they check "Yes" on line 14. They also check "Yes" on Form 8962, line 9, check "No" on line 10, and continue to steps 6, 7, and 8 in this publication.

Step 6

Paulette and Quentin complete lines 35 and 36 as explained below.

Line 35.

Paulette and Quentin complete lines 12-23 as explained below.

Column (a). They enter the amounts from column (a) of Worksheet 3 (shown later).

Column (b). They enter the amounts from column (b) of Worksheet 3.

Column (c). On lines 12-18, they enter the monthly totals of Worksheet II, column C, and Worksheet IV, column C. On lines 19-23, they enter the amount from Form 8962, line 8b.

Column (d). They enter the difference between columns (c) and (b).

Column (e). On lines 12-18, they enter the monthly amounts from column A of Worksheet V. On lines 19-23, they enter the smaller of column (a) or (d).

Column (f). They enter the amounts from column (f) of Worksheet 3.

Step 8

Paulette and Quentin complete lines 24-29 as explained below.

Line 24. They add the amounts on lines 12(e)-23(e) and enter the total, $8,303. (As explained earlier under Line 9, their total PTC would be only $7,449 if they did not elect the alternative calculation.)

Line 25. They add the amounts on lines 12(f)-23(f) and enter the total, $8,423.

Line 26. According to Step 8, they enter -0- because they elected the alternative calculation for year of marriage.

Line 27. They subtract line 24 from line 25 and enter the difference, $120.

Line 28. They enter the repayment limitation of $2,550 from Table 5 in the Form 8962 instructions.

Line 29. They enter $120. This is the smaller of line 27 or line 28. They also enter $120 on Form 1040A, line 29 (not illustrated). (As explained earlier under Line 9, the excess APTC they would have to pay would be $974 if they did not elect the alternative calculation.)

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This part provides special instructions for figuring the self-employed health insurance deduction and PTC if you or your spouse was self-employed, you or a member of your tax family was enrolled in a qualified health plan in 2016, and you may be eligible for the PTC. Because the amount of the self-employed health insurance deduction may affect the amount of the PTC, and the amount of the PTC may affect the amount of the deduction, a taxpayer who may be eligible for both may have difficulty determining the amounts of those items. A taxpayer who may be eligible for both may follow the instructions in this part to determine amounts of the self-employed health insurance deduction and PTC that are allowable under the law.

CAUTION: Using the special instructions in this part is optional. If you are eligible for both a self-employed health insurance deduction and the PTC for the same premiums, you may use any computation method that results in reporting amounts that satisfy the rules for both the deduction and PTC, as long as the sum of the deduction claimed for the premiums and the PTC computed, taking the deduction into account, is less than or equal to the enrollment premiums.

Before you complete any of the worksheets in this part, you should first do the following.

Use Worksheet P to figure the amount you can deduct for nonspecified premiums.

Exceptions. Use Worksheet 6-A in chapter 6 of Pub. 535 instead of Worksheet P to figure your deduction for nonspecified premiums if any of the following applies. (Only include nonspecified premiums on line 1 or 2 of Worksheet 6-A.)

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The following are examples of nonspecified premiums.

Specified Premiums

Specified premiums are the premiums for a specified qualified health plan or plans for which you may otherwise claim as a self-employed health insurance deduction on line 29 of Form 1040 or Form 1040NR. Generally, these are the premiums paid for the months you were self-employed. If you were self-employed for part of a month, the entire premium for that month is a specified premium. A specified qualified health plan is a qualified health plan that covers one or more members of your coverage family for a month for which your enrollment premium(s) have been paid by the due date prescribed under Enrollment premiums, discussed earlier. Qualified health plan, coverage family, and enrollment premiums are defined earlier under Terms You May Need To Know.

Note. If you are filing Form 8885, specified premiums do not include any of the following amounts.

Plan covering individuals in another tax family. If the plan covers at least one individual in your tax family and one individual in another tax family, you may have to allocate policy amounts between your tax family and the other tax family. See Line 9 in the Form 8962 instructions for instructions on how to allocate policy amounts. Do this allocation before you determine the portion of the specified premiums allocable to your coverage family discussed next.

Plan covering individuals not in your coverage family. If the plan covers individuals who are not in your coverage family, use only the portion of the premiums for the specified qualified health plan that is allocable to your coverage family. You determine the specified premiums that are allocable to your coverage family by multiplying the enrollment premiums for the months you were self-employed and the plan covered non-coverage family members by a fraction. The numerator of the fraction is the premium for the applicable second lowest cost silver plan (SLCSP) for your coverage family. The denominator of the fraction is the total of (1) the premium for the applicable SLCSP for your coverage family and (2) the premium for the applicable SLCSP for the individuals who are not in your coverage family.

Example. Gary was self-employed in 2016 and enrolled in a qualified health plan. APTC was paid to his insurer on his behalf. The policy covers Gary, Gary's wife Sue, and Gary's two dependent daughters. Sue is not in the coverage family because she is eligible to enroll in her employer's health insurance. The enrollment premium is $15,000. The premium for the applicable SLCSP covering Gary and his two daughters is $12,000 and the premium for the applicable SLCSP covering Sue is $6,000. Gary figures the amount of specified premiums by multiplying the $15,000 enrollment premium by a fraction. The numerator of the fraction is the premium for his applicable SLCSP ($12,000). The denominator of the fraction is the total of the premiums for the applicable SLCSP of both Gary and Sue ($18,000). The result is $10,000 ($15,000 enrollment premium × ($12,000/$18,000)) of specified premiums, which Gary enters on Worksheet W, line 1, and Worksheet X, line 27. The remaining $5,000 of enrollment premium ($15,000 enrollment premium -- $10,000 specified premiums) is attributable to Sue's coverage and is a nonspecified premium that Gary enters on Worksheet P, line 1.

Worksheet W. Figuring the Limit on the Self-Employed Health Insurance Deduction for Specified Premiums

 Note. If you have more than one trade or business under which a

 Note. Complete this worksheet only if advance payments of the premium

Line 4. Include your IRA deduction on line 4 only if you (and your spouse if filing a joint return) were not covered by a retirement plan at work or through self-employment.

Line 25. Also enter this amount on line 28 of the Form 8962 you attach to your tax return if you are required to complete that line and you do not complete Worksheet Y (shown later). Do not enter an amount from Table 5 in the Form 8962 instructions.

Special instructions for filers of Form 8885. If you file Form 8885, use the following instructions to complete Part III.

If (1) you are electing to take the Health Coverage Tax Credit (HCTC) on Form 8885 for at least one month of the year for individual(s) who were also enrolled in a qualified health plan offered through the Marketplace for at least one other month of the year and (2) you did not receive the benefit of advance monthly payments of the HCTC for those individual(s) during the year, do the following.

If you do not qualify to take the PTC (Form 8962, line 24, is -0- or blank), do not enter the amount from Worksheet X, line 25, on Form 8962, line 28. Instead see Line 28 in the Form 8962 instructions to find out what to enter on line 28.

Iterative Calculation Method

Follow the steps below to figure your self-employed health insurance deduction and PTC under the Iterative Calculation Method. You do not have to use this method. You can use the Simplified Calculation Method (discussed later) or any computation method that satisfies each set of rules as long as the sum of the deduction claimed for the premiums and the PTC computed, taking the deduction into account, is less than or equal to the premiums.

CAUTION: Do not round to whole dollars when performing the computations under this method. Instead, use dollars and cents. This is necessary so you can complete Step 6.

Step 1

Figure your adjusted gross income (AGI), modified AGI, and household income using Worksheet X, line 31, as your self-employed health insurance deduction. If you did not fill out Worksheet X, use the amount from Worksheet W, line 17. Use Worksheets 1-1 and 1-2 in the Form 8962 instructions to figure modified AGI and household income.

CAUTION: If you are claiming any of the following deductions or exclusions, see Special Instructions for Self-Employed Individuals Who Claim Certain Deductions/Exclusions (discussed later) before you complete Step 1.

Figure the total PTC on Form 8962 using the AGI, modified AGI, and household income you determined in Step 1. Enter the modified AGI and household income from Step 1 on the Form 8962. When figuring the PTC, use all enrollment premiums for qualified health plans in which you or an individual in your tax family enrolled. Complete this Form 8962 only through line 24. Do not attach this Form 8962 to your tax return.

Note. If you are not eligible to take the PTC, stop here. Do not use this method. Instead, figure your self-employed health insurance deduction using the Self-Employed Health Insurance Deduction Worksheet in the Form 1040 or Form 1040NR instructions or, if required, Worksheet 6-A in chapter 6 of Pub. 535. If you are following the instructions under Special Instructions for Self-Employed Individuals Who Claim Certain Deductions/Exclusions, make this determination when you complete the final iteration of Step 2. Refigure the deductions/exclusions if you are not eligible for the PTC.

Step 3

Figure your self-employed health insurance deduction for specified premiums by completing the following worksheet.

CAUTION: If you have more than one trade or business under which you established a qualified health plan, see More than one trade or business below before you complete the Step 3 Worksheet.

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