Form 1095-A Reconciliation

With no repayment caps, Form 8962 filing errors carry unlimited liability. Clients MUST file Form 8962 to reconcile advance credit payments—even if not otherwise required to file. Clients receive Form 1095-A from their Marketplace by early February with data needed for Form 8962. Missing forms require contacting the Marketplace—IRS cannot provide replacements.

• Note: Electronically filed returns will be rejected without Form 8962 if any APTC was paid on behalf of the taxpayer or family members. Failure to file Form 8962 when required means ineligibility for APTC in future years. Your clients become responsible for full monthly premiums going forward.

Shared Policy Allocations

Allocation errors on Form 8962, Part IV trigger significant repayment obligations. When one policy covers individuals from multiple tax families, enrollment premiums, SLCSP premiums, and APTC must be allocated between taxpayers. Common scenarios include:

• Divorced or separated parents where one parent maintains Marketplace coverage for children claimed as dependents by the other parent
• Grandparents covering grandchildren who are claimed as dependents on their adult child’s tax return
• Adult children enrolled on a parent’s policy but filing their own returns

These taxpayers must agree on allocation percentages. When taxpayers can’t agree, the FAQs rule: each taxpayer’s percentage equals the number of individuals they include in their tax family who were enrolled in the plan, divided by the total number of individuals enrolled.

Employer Coverage Affordability: Family Member Eligibility Rules

Misunderstanding employer coverage affordability rules for family members can lead to incorrect PTC claims and subsequent repayment. Don’t assume that if an employee has access to affordable self-only employer coverage, all family members are automatically ineligible for premium tax credits. Family members are NOT automatically ineligible. If family coverage costs exceed the affordability percentage (9.02% for 2025, 9.96% for 2026), family members may qualify for Marketplace subsidies even when employee self-only coverage is affordable.

Individual Coverage Health Reimbursement Arrangement (ICHRA) Affordability

ICHRA affordability miscalculations can result in improper PTC claims that must be fully repaid. Under §1.36B-2(c)(5), an ICHRA is considered affordable only “if the employee’s required HRA contribution does not exceed 1/12 of the product of household income” and the “required contribution percentage” (9.96% for 2026).

• Here’s how it’s calculated: Required HRA contribution equals the monthly premium for the lowest cost silver plan minus 1/12 of the employer’s annual HRA contribution.

Employees who opt out of an unaffordable ICHRA may qualify for premium tax credits, but only if the affordability calculation is performed correctly and the ICHRA is determined to be unaffordable.