I am recently married, and have health insurance through my employer. My wife has health insurance through the Affordable Care Act (ACA). Her health insurance is much better than mine, and putting her on mine will increase my monthly premium by $400. We can't afford this additional cost every month. She is not taking my name, so is it possible for both of us to continue to file as "single" so that she is not forced onto my health insurance?
You cannot continue to file as single after you marry. Married spouses should file a married filing jointly (MFJ) return unless circumstances require them to file separately (MFS). Know that filing MFS is extremely disadvantageous to both spouses.
Based on the timing of this question, I believe you have shopped on the ACA Marketplace and are now exploring options to obtain affordable coverage for her. A lot more information is required for a definitive response for your particular situation, but I made several assumptions in order to arrive at a general response. These are a few of the assumptions I made:
- Your spouse has an income low enough to qualify for a significant subsidy through the ACA marketplace, so she is paying little or nothing for her health insurance.
- Your employer-provided insurance is “affordable” and ACA-compliant. (If it is not ACA-compliant, then both of you could purchase health insurance through the Marketplace.) The IRS has ruled that an employer plan is “affordable” if the cost for employee-only coverage (for the least-expensive plan available from the employer) does not exceed 9.56 percent of household income in 2018. This is true regardless of the total amount that must be paid to cover dependents on the policy.
When you file a joint federal tax return, her large subsidy may change for the year you married. If she is eligible to join your “affordable” plan, then she cannot get a subsidy through the Marketplace, even if she buys insurance there. This probably means the lowest-cost alternative is to join your plan.
You must look at the whole picture. There are advantages to filing jointly, especially when one of you has low income. If your spouse has a low income as a single filer, then she probably has unused deductions and/or credits that may be usable on a joint return. For instance, in 2018, the married filing jointly standard deduction is $24,000 (as compared to $12,000 for a single filer). This removes $24,000 of your joint income from taxability, and the tax rates for MFJ result in more income being taxed at lower rates than for singles.
There may be other advantages to filing jointly (such as education credits). So, consider the entire situation before concluding that you can’t afford health insurance for your spouse.
For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.
Answered by: Harold P. Eck, CPA, is an individual practitioner in Jersey Shore, Pa.