As the open enrollment period continues for coverage on the state health insurance marketplaces, people continue to have many questions about buying a plan there.

Q. What happens with premium tax credits if a couple gets divorced? If the premium tax credit is based on the previous year's income when the couple filed taxes jointly, many wouldn't qualify. But once someone is divorced, one individual might have little income. What is the subsidy based on in that situation?

A. 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 percent of the 2013 federal poverty level ($45,960 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 percent 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. (KHN is an editorially independent program of the 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.

Q. We live in Texas because my husband is going to