Almost everyone's impacted this year by new tax return reporting requirements that are part of the Affordable Care Act (ACA), the health insurance reform law also known as "Obamacare." Here's what you will do when filing your income tax return with the Internal Revenue Service.
Verify You Had Coverage
All Americans now must report that they have health insurance – for example, coverage purchased direct from an insurance company, the state or federal marketplace (i.e., Washington Healthplanfinder in Washington or healthcare.gov in Alaska), their employer, parent’s plan, Medicaid, Medicare TRICARE or COBRA.
Pay Penalty If You Did Not
If you did not have health insurance for at least nine months each year — and you don't qualify for an exemption from the IRS — you'll pay a penalty when filing your return. The 2014 penalty is the greater of:
- $95 per adult and $47.50 per child (up to $285 for a family)
- 1% of your household income, after you subtract the amount that is above the income level where you begin to owe taxes (filing threshold). For example, that amount is $10,150 for single filers under age 65. A tax penalty calculator is available online.
If you've been granted an exemption from a penalty, you'll need to complete Form 8965 and report that on your federal income tax return.
Report a Washington Healthplanfinder Account
If you enrolled in a 2014 health plan through Washington Healthplanfinder (regardless of whether you got federal financial help), you must file a federal income tax return if anyone in your household received an advance premium tax credit or wants to claim a tax credit for 2014.
By early February, Washington Healthplanfinder should mail you a completed Form 1095-A, also known as the Health Insurance Marketplace Statement. Your health insurance company will NOT be sending you this statement. This new IRS form will give you the information needed to complete your 2014 income tax return.
Form 1095-A includes health plan information such as who was covered on the plan, your monthly premium, how many months you had coverage, and any advance payments of the premium tax credit that may have been paid to your health plan on your behalf in 2014.
It's best to wait until you receive Form 1095-A before filing your taxes, because you can't be sure your tax refund or the amount you owe will be accurate. With the information, you may wish to claim additional tax credits that you are entitled to or reconcile the tax credits with what you've already received.
Reconcile Your Tax Credit
When you complete your 2014 federal income tax form, you'll know what your actual 2014 income was – it may be higher or lower than your estimate. You'll use IRS Form 8962 to reconcile the difference:
- If the amount of tax credit payments you used in advance during 2014 is less than the tax credit you're due, you may get the difference as a refund when you file your tax return, depending on the final amount of taxes you owe.
- If the amount of tax credit payments you used in advance for the year is more than the tax credit you're due, you'll pay the difference with your tax return when you file your taxes.
Where You Can Get Help
You'll find a variety of resources online with information on how your health insurance coverage affects your tax filing, along with all the forms you might need, at Healthcare.gov. In addition, if you qualify you might use these free resources: