Good Morning. My ex wife is enrolling our two children under her insurance. Both children live with me full time since 2010, I’m the custodial parent (court order is current) and claim them both on my yearly taxes.
Do our children have to live with her full time and does she have to be the custodial parent in order to enroll them? Both of our children have 100% medical and dental coverage under my insurance through Tricare Prime (U.S Coast Guard). My ex wife is not very honest and has a history of defrauding the government in regards to paying her taxes. I want to ensure that what she is trying to do is legal and will not cause me any issues either.
Only the custodial parent can claim cost assistance and will owe the fee if the children go without coverage under ObamaCare unless the non-custodial parent files Form 8332. This form is not required if the children have minimal essential coverage throughout the year and no one is attempting to claim Premium Tax Credits regardless of which parent provides the coverage.
Revocation of Release of Claim to Exemption for Child by Custodial Parent (form 8332) is for unmarried parents who do not live together, but who are together responsible for more than 50% of the dependents financially needs (see the IRS Pub 504 for all criteria) to share the dependents. The non-custodial parent would claim a dependency exemption on the year end taxes.
By signing the form 8332 the custodial parent waives their right to claim an exemption for the dependent, as well as, child tax credits. The parent claiming an exemption for the dependent is the only parent eligible for Premium Tax Credits, but this means being responsible for the Shared Responsibility fee as well for any months the child was not covered. In this situation the custodial parent would still be eligible to file Head of Household, and for other dependent related tax credits/deductions (like for child care), but not an exemption for the dependent, a child tax credit, or Premium Tax Credits.
In your case, you seem to be dealing with non-marketplace coverage. Tricare Prime is considered minimal essential coverage and she is not trying to claim the child for premium tax credits. You are responsible for the fee, but if they have coverage through her, then the children are considered covered for your tax obligations for the Individual Mandate.
You can certainly be on a slippery slope here, especially if co-parenting isn't on friendly terms. Because you are the custodial parent, you might want to have them get coverage through you. Since she isn't claiming the children she won't get any tax benefit for providing them coverage, but you might, and you will definitely be on the hook if for some reason the children lacked coverage at any point.