What Happens with Premium Tax Credits If a Couple Gets Divorced?

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.

Premium tax credits are available to people with incomes up to 400% of the 2019 federal poverty level ($48,560 for an individual).

During the application process, people are asked to project their income for the year. If someone estimates income that’s more than 10% lower than the previous year’s taxes or wage information or Social Security data would suggest, the system will flag it.

“If there’s a discrepancy, the system will require [the applicant] to provide documentation of the reduced income,” says Jennifer Tolbert, director of state health reform at The Kaiser Family Foundation. The documentation could take different forms, such as a current pay stub.

At tax time next year, the Internal Revenue Service will reconcile an individual or family’s actual income against the amount that was projected. People who received too much in tax credits may have to repay some or all of it. The situation may be different for couples that are separated but not yet divorced, however. If each files taxes as “married filing separately” neither will be eligible for premium tax credits on the exchange.