Beyond the Affordable Care Act's Premium Tax Credit: Ensuring Access to Safety Net Programs

Abstract

The United States took a gigantic step toward universal health care with the passage of the Affordable Care Act (“ACA”). Under the ACA, nearly everyone is required to have coverage, and correspondingly, no one can be turned away. To ease the financial burden of the individual mandate, the ACA subsidizes coverage for lower-income people. The primary subsidy is a refundable tax credit called the Premium Tax Credit, first available in 2014.

To claim the credit, a person must file a tax return — but not just any return. The ACA requires married individuals to file jointly. For many, this is problematic if not downright dangerous. The tax code currently has some exceptions that allow married individuals to be treated as single, but those exceptions do not reach all people for whom filing jointly is dangerous or difficult. In recognition of this reality, the IRS published temporary regulations implementing an exception to the joint filing requirement for certain victims of domestic abuse or spousal abandonment.

This article urges the IRS to expand the exception to other categories of individuals who face serious hurdles to filing jointly, such as long-separated spouses. Couples in long-term separations tend to be low-income racial and ethnic minorities with children, exactly the target population for the Premium Tax Credit. This article makes concrete suggestions for reforms that would better protect vulnerable populations and lead to more equitable results.

Looking beyond the Premium Tax Credit, this article outlines other tax benefits that are lost when not filing jointly. The Premium Tax Credit is but one example of a more systemic problem. For example, the Earned Income Tax Credit, the single largest federal cash assistance program, is lost to a married taxpayer without a joint return. This article looks critically at why the tax code repeatedly requires joint filing to claim tax benefits and argues that the Premium Tax Credit exception should be extended to apply to other tax benefits. If we are truly concerned that a domestic violence victim cannot (or should not) file jointly with an abuser, then we should enable the victim to receive all the tax benefits that are so critical to our anti-poverty efforts.

Keywords: Affordable Care Act, Premium Tax Credit, Joint Returns, Domestic Violence