In Uncategorized on 11/28/2017 at 15:57

Given the pummeling, condemnation, calls for repeal, replacement, shrieking,  tweaking and political scrimmaging to which the Affordable Care Act has been subjected these last seven years, I feel like I’m piling on long after the whistle. But Judge Buch’s off-the-bench designated hitter Juanita P. Morgan, Docket No. 14362-16, filed 11/28/17, points up yet again the unintended consequences that attend this complicated statutory ziggurat.

Juanita’s old insurance lacked the essential bells and whistles that ACA engrafted onto her coverage. To bring her insurance up to snuff, Juanita joined the exchange and got $7K of premium assistance. Juanita was then under the 400% of Federal poverty cutoff.

But Juanita’s generous heart betrays her.

Judge Buch takes up the tale: “After the eligibility determination, but still in [year at issue], one or more of Ms. Morgan’s family members needed financial assistance. Ms. Morgan had funds that she could withdraw from a retirement account without penalty and graciously decided to help her family. She was not aware that she might run afoul of the ACA income limits. Ms. Morgan took gross distributions from her individual retirement accounts in the amount of $36,408.

“Ms. Morgan timely filed her tax return and reported an adjusted gross income of $49,282. Due to the withdrawal from her retirement accounts, Ms. Morgan’s income was greater than the premium assistance credit eligibility threshold.” Order, Transcript, at p. 4.

Well, Juanita’s 1099-R and 1040 set off the usual sounding gongs and clanging cymbals at the IRS Service Center, and Juanita gets hit for the $7K.

Judge Buch can do nothing to help.

“Ms. Morgan’s withdrawal of retirement funds to help her family put her income over 400 percent of the Federal poverty line. Although we are sympathetic to Ms. Morgan’s situation, the statute is clear; because her income was over that threshold, she was no longer entitled to the credits she had received. And excess advance premium tax credits are treated as an increase in the tax imposed. Sec. 36(B)(f)(2) (A). She is liable for the $6,930 deficiency.” Order, Transcript, at p. 7.

So Juanita had adequate insurance, for which she paid more than she wanted only because she helped her kinfolk.

I will not point out the obvious solution, as this is a nonpolitical blog.

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