If you and your former spouse were covered under the same Health Insurance Marketplace plan, you may receive a single Form 1095-A that includes coverage information for both of you. When this happens, you'll generally need to allocate the policy amounts between the two tax returns using the Shared Policy Allocation rules on Form 8962, Premium Tax Credit.
This allocation ensures that any Premium Tax Credit (PTC) and Advance Premium Tax Credit (APTC) amounts are reported correctly based on each person's share of the coverage.
When Is Shared Policy Allocation Required?
You may need to complete a Shared Policy Allocation if:
- You and your former spouse were enrolled in the same Marketplace health insurance policy.
- The Marketplace issued one Form 1095-A covering both individuals.
- You divorced or legally separated during the tax year, or you're otherwise required to allocate a shared Marketplace policy.
What Amounts Must Be Allocated?
The following amounts from Form 1095-A must be divided between the taxpayers for the applicable months:
- Premium Amount (Column A)
- Second Lowest Cost Silver Plan (SLCSP) Amount (Column B)
- Advance Premium Tax Credit (APTC) Amount (Column C)
The same allocation percentage must be used for all three columns for each month being allocated.
How Do Allocation Percentages Work?
You and your former spouse may agree on any allocation percentage as long as:
- The percentages total 100%.
- The same percentage is applied to Columns A, B, and C.
For example, one taxpayer may use 75% and the other 25%, or any other agreed-upon split.
If you cannot agree on a percentage, IRS rules generally allow each taxpayer to use a 50% allocation for the shared months.
Entering a Shared Policy Allocation in the Software
Step 1: Enter Form 1095-A
- Go to Federal.
- Select Health Insurance.
- Answer Yes when asked if you received a Form 1095-A.
- Enter the Form 1095-A exactly as it appears.
Step 2: Open the Shared Policy Allocation Menu
On the Advance Premium Tax Credit screen:
- Select Allocate policy amounts (Form 8962, Part IV).
- Choose Add another allocation.
Step 3: Enter Allocation Information
Provide the following information:
- Policy number from Form 1095-A
- If the policy number exceeds 15 digits, enter only the last 15 digits.
- Social Security number of the former spouse sharing the policy.
- Allocation start month and stop month.
- Use a two-digit month format (for example, January = 01).
Next, enter your allocation percentage for:
- Premium Amount
- SLCSP Amount
- Advance Premium Tax Credit Amount
Percentages can range from 0% to 100%.
Step 4: Calculate and Enter Allocated Amounts
When prompted:
"Do all Forms 1095-A include coverage for January through December, with no changes in monthly amounts?"
Select No.
You'll then need to manually enter:
- Allocated Premium Amount
- Allocated SLCSP Amount
- Allocated APTC Amount
How to Calculate the Allocated Amounts
For each month covered by the shared policy:
- Determine your allocation percentage.
- Multiply that percentage by the monthly amounts shown in Columns A, B, and C of Form 1095-A.
- Enter the resulting allocated amounts into the appropriate monthly fields.
Important: The software does not automatically calculate these allocation amounts. You must calculate and enter them manually.
Multiple Shared Policies
If more than one shared Marketplace policy applies during the year:
- Calculate the allocated amounts for each policy.
- Add the monthly allocated amounts together.
- Enter the combined totals for each month.
Step 5: Review Your Return
Before filing, verify:
- Allocation percentages are correct.
- Monthly allocated amounts were entered accurately.
- Form 8962, Part IV reflects the allocation correctly.
- Form 8962, Part II reflects the expected Premium Tax Credit calculation.
Once you've reviewed the information, continue through the remainder of your return.
Example of a Shared Policy Allocation
Assume Form 1095-A shows the following monthly amounts:
- Premium Amount (Column A): $800
- SLCSP Amount (Column B): $700
- APTC Amount (Column C): $500
If you and your former spouse agree to a 50/50 allocation, your share for that month would be:
- Premium Amount: $400
- SLCSP Amount: $350
- APTC Amount: $250
These are the amounts you would enter when completing the allocation section.
Key Takeaway
When a divorced or separated couple shares a Marketplace health insurance policy, the policy amounts on Form 1095-A often must be allocated between both taxpayers using Form 8962. Be sure to use the same allocation percentage for Columns A, B, and C, calculate the monthly amounts carefully, and review Form 8962 before filing to avoid processing delays or IRS notices.