Affordable Care Act and Minnesota Divorce Law: Tax Credit Eligibility for Divorcees

Some people have wondered how the tax credits made available through the Affordable Care Act intersect with the recently divorced.   

As you may know, premium tax credits are available to people with incomes up to 400 percent of the 2013 federal poverty level ($45,960 for an individual). Thus to offset the cost of health insurance for people with income below these levels (the levels vary based on the number of children claimed as dependents on their tax returns), the ACA provides these tax credits.  

The question arises when the prior year’s tax return shows the former spouse’s income. If the premium tax credit is based on the previous year's income when the couple filed taxes jointly, many new divorcees would not qualify. But now that that person is divorced, that person might have too little income to afford taxes and health insurance.

The answer lies in the fact that if a couple divorces, each person's eligibility for premium tax credits will generally be based on his or her own annual income. The former spouse's income won't be counted, even if the couple filed taxes jointly the previous year.

For more information the Affordable Care Act and Minnesota Divorce and Family Law, please be sure to read my other blog posts.