Affordable Care Act

The Affordable Care Act Tax Provisions for Individuals and Families

THE BASICS

As of 2014, all individuals are now required to have health insurance coverage OR to qualify for an exemption from this requirement. These requirements apply to everyone on YOUR tax return – you, your spouse, your children, and anyone else that you can claim as a dependent on your tax return in 2015. If anyone on your tax return does not have coverage and does not qualify for an exemption, a shared responsibility payment may be assessed on your return.

 

NEW THIS YEAR

As of 2015, all individuals who had health insurance will receive a form 1095 A, B or C. These forms report information on your coverage and will be required to complete your tax return this year.

Also new: an increased penalty for not having coverage. See “Shared Responsibility Payment” below.

 

HEALTH COVERAGE

Health coverage that you received through an employer, a policy you purchased on your own (either directly or through a state or federal health insurance exchange), Medicare, Medicaid, or Oregon Health Plan will generally meet the requirements for coverage. See a comprehensive list here.

 

SHARED RESPONSIBILITY PAYMENT or “PENALTY”

If you can afford health insurance but choose not to buy it, you generally must pay the fee. The fee is sometimes called the “penalty,” “fine,” “individual responsibility payment,” or “individual mandate.” “Affordability” is a specific term in this situation, and will be assessed as part of your tax return. For 2014, the payment is the greater of 2% of your adjusted household income (up to the amount that you would have paid for a bronze level insurance policy) OR $325 per person 18+ and $162.50 per person under 18 (up to a maximum of $975).

These amounts will go up again in 2016! For more details on the shared responsibility payment, click here.

 

EXEMPTIONS TO THE PENALTY

There are a number of exemptions to the penalty that you may qualify for. Some exemptions you can apply for directly on your tax return. Others, including exemptions based on hardship, because coverage was considered unaffordable, and several others, MUST be applied for through the Marketplace. This process can take up to a month, so apply as soon as you can. Go here for more information on applying for an exemption.

 

PREMIUM TAX CREDIT

You may qualify for a refundable tax credit to help offset the costs of health coverage. This credit is ONLY available to you if you purchased your policy through a state or federal exchange, and your adjusted household income is less than 400% of the Federal Poverty Level. See here for more details on qualification, including the income tables (for information only – this is calculated as part of your tax return automatically).

Some taxpayers were given the ability to get this credit in advance, which reduced the amount you had to pay each month for your insurance. If this is the case, your tax return is where we compare the tax credit that you actually got to the tax credit you qualify for. If you chose not to take the advanced credit, or if you actually qualify for more than you received, the additional credit will be refunded to you on your tax return. However, if you got more money advanced to you than you qualify for, you may be required to pay back some of the advanced credit you received. Again, this will be automatically calculated as part of your return when we prepare your taxes.

If you purchased your insurance through The Marketplace, you will receive a FORM 1095-A. We must have this form to prepare your taxes.

 

WHAT WE NEED FROM YOU

This year, we will need quite a bit of information from you in order to accurately prepare your tax return. We MUST know the exact dates of health insurance coverage for everyone on your tax return. This will most likely be reported to you on form 1095 A, B or C, which you will receive from your health insurance provider.

 

ADDITIONAL INFORMATION

The IRS has released written guidance on this in Publication 5187, available for you to download here. They also have an overview page for Affordable Care Act provisions here.

Go to The Marketplace to apply for coverage, report life changes, apply for a penalty exemption, or browse FAQs.