The Affordable Care Act (ACA) and Your Taxes
Important: Starting with Tax Year 2018 (Jan. - Dec. 2018), the Affordable Care Act (ACA) and how it impacts your 2018 tax return may change due to recent Tax Reform. We are updating this page as the facts become available. Tax Reform and you? Let efile.com help you and become eligible to Tax Win. Find out now.
The Affordable Care Act (or Obamacare) requires almost all U.S. citizens and legal residents (and their dependents) to have health insurance for the entire year. There is a tax fee for not having health insurance during the year. However, there are very few exceptions to this requirement, so you may qualify for a tax payment exemption on your tax return. When you start a free tax return on efile.com, we will automatically report your health care information on the correct tax forms.
Important: The IRS requires taxpayers to report their health insurance information on their efiled or paper filed tax returns. Any returns that do not have health insurance information will not be accepted by the IRS and tax refunds may be delayed.
Still confused about how the Affordable Care Act works? Check out any of the topics below so we can help make it more understandable for you:
Who is Required to Have Health Insurance
You must have have qualifying health insurance, qualify for an exemption, or make a tax payment for not having insurance when you file your tax return if you are:
Already Have Health Insurance - If you already have health insurance through your employer, a private company, or under a government program (Medicare, Medicaid, or veteran coverage) for the entire year, you do not need to change anything about your tax situation. However, if you have private health insurance that is not through an employer), you may wish to check out the Health Insurance Marketplace (also know as the Exchange) at HeathCare.gov in case you may find a better deal.
Changes to Your Health Insurance Through the Marketplace - You should update your 2018 Marketplace information all year by reporting any changes to your income and household. You need to make sure that you have the minimum essential coverage as defined by the Affordable Care Act. The minimum essential coverage includes individual policies purchased on the Health Insurance Marketplace, job-based coverage, Medicare, Medicaid, CHIP, TRICARE and others. More information and instructions for updating your health insurance information are on HealthCare.gov.
Reporting Your Health Insurance
If you have health insurance, you only have to check a box on your tax return (1040-EZ, 1040-A, or 1040) showing that you had health insurance for the year. When you prepare your tax return on efile.com, we will ask you if you have health insurance, and once you answer "Yes," we will automatically check the appropriate box on your return (so you don't have to!). We will also prepare other forms that might need to be filed with your return if you didn't have health insurance coverage for the full year.
Start Your 2017 Tax Return Now!
How To Report Your Health Insurance - You will need to use one or more of the forms below to report your health insurance coverage on your tax return on efile.com. During the tax interview questions, you will be asked about your insurance coverage for the year. You can use these forms for the information you will be asked to provide:
- Form 1095-A - Health Insurance Marketplace Statement - You will receive this form if you purchased health insurance via the Health Insurance Marketplace exchange. It will provide information for you if you need to complete Form 8962 for the Premium Tax Credit. If you or your family members enrolled in more than one health plan via the Marketplace, you will receive a Form 1095-A for each policy. A copy of each Form 1095-A will also be sent to the IRS.
- Form 1095-B - Health Coverage - This form is provided by your insurance provider and has the information you need to report on your tax return showing that you, your spouse, and any dependents have qualifying health insurance coverage for some or the entire year. This form is for your information only and is not included in your tax return. You will use the information when you prepare your return on efile.com.
- Form 1095-C - Employer-Provided Health Insurance Offer and Coverage - This form will be provided to you by your employer and contains information about the health coverage offered to you by your employer. There was a delay in the large employer mandate to provide health insurance coverage so if you do not receive this form from your employer, check with your employer's benefits department. This form is for your information only and is not included in your tax return. You will use the information when you prepare your return on efile.com.
- Form 8962 - Premium Tax Credit - This form will be prepared for you on efile.com if you purchased health insurance through the Marketplace and you are eligible for the Premium Tax Credit.
- Form 8965 - Health Coverage Exemptions - You will need to prepare this form if you are reporting that you are exempt from health care coverage.
If you did not receive any of the forms listed above, you can go Healthcare.gov and print them from there.
If you receive a letter from the IRS about your 2017 Marketplace coverage then based on their records, they have received a Form 1095-A from the Marketplace for you, and the letter is informing you that you did not file a 2017 tax return. The letter is a reminder that if you do not file a return, you may not be able to qualify for advance tax payments for your Marketplace coverage in 2018. For more information about the IRS health insurance letter, visit our Premium Tax Credit page.
If You Don't Have Health Insurance
If you don't have health insurance for any month during the Tax Year, you will need to pay a fee called the individual shared responsibility payment with your tax return. You might be able to obtain an exemption from the payment, but that is only for certain circumstances, such as financial hardship. The payment may cause your tax refund to be lower, or it might result in higher taxes due on your tax return. Efile.com will automatically calculate your payment based on the information you enter during the tax return preparation process.
If you don't get health insurance from your employer you can purchase it via the Marketplace during the Open Enrollment period (Nov. 1 to Dec. 15, 2018). If you miss the Open Enrollment period you might be eligible for the Special Enrollment Period that lets you buy coverage via the Marketplace on HealthCare.gov outside the Open Enrollment period. You might get coverage during the Special Enrollment Period if any of these situations applies to you:
1) Life Changes for Special Enrollment Period:
- Loss of health coverage
- Changes in household size such as getting married, birth or adoption of a child, divorce, legal separation, death
- Moving to a new residence
- Gaining citizenship or lawful presence in the U.S.
- Released from incarceration (detention, jail, prison)
- No longer eligible for Medicaid or CHIP
- Being a member of a federally recognized tribe or as an Alaska Native Claims Settlement Act (ANCSA) Corporation shareholder
- AmeriCorps starting or ending service
2) Medicaid and Chip:
- You can enroll in coverage through Medicaid and the Children's Health Insurance Program (CHIP) if you qualify. There is no limited enrollment period for these programs which provide free or low-cost health coverage to millions of Americans and you can apply any time.
If you do not qualify for the 2 circumstances described above, your employer may be required to offer you health insurance, so you should check with them as well. If your employer employs 50 or more people, they are required to offer you health coverage. If you can get coverage through your employer, you can still opt to get your insurance privately or through the Marketplace at HealthCare.gov (during the Open Enrollment period), but you will not qualify for a health insurance premium called a subsidy.
3) If You Cannot Afford Health Insurance:
If your household income is between 100% and 400% of the federal poverty guidelines, and you do not qualify for Medicare, Medicaid, or employer-sponsored health coverage, then you may qualify for a subsidy to pay some or all of the cost of health insurance purchased through an exchange.
Subsidy - A health insurance premium subsidy is actually a federal tax credit, which the IRS calls the Premium Tax Credit. However, the credit is applied directly to the price of your premium and acts like a discount. The amount of your subsidy depends on your family size and income. The lower your income (and the larger your family), the higher your subsidy.
For individuals and families with incomes from 100% to 400% of the federal poverty level, the out-of-pocket cost for health coverage will be from around 2% to 9.5% of the actual price (based on a plan that covers 70% of healthcare costs). Additional funds, called cost-sharing assistance, will be made available to households with incomes lower than 250% of the poverty level.
Households with incomes less than 100% of the federal poverty level will generally qualify for Medicaid. More people, including single individuals, may qualify for Medicare, if their resident states are participating in the Medicaid expansion offered by the Affordable Care Act.
Federal Poverty Level - The federal poverty guidelines are established each year by the U.S. Department of Health and Human Services. For 2017, the official poverty level for residents of most states ranged from $12,060 for an individual to $41,320 for a family of 8.
If you still cannot afford health insurance or choose not to purchase it you will pay the individual shared responsibility payment with your tax return to the IRS.
Important Health Insurance Dates
|Open Enrollment Begins for 2019 Coverage
||November 1, 2018
Open Enrollment Ends for 2019
|December 15, 2018
|Coverage for 2019 Begins
||January 1, 2019
2018 Tax Return Deadline
April TBD, 2019
|Report Income and Household Changes to Marketplace
All Year 2018 and 2019
Related Health Care Tax Information
Tax Payments and Tax Payment Exemptions for Not Having Health Insurance
What is the Premium Tax Credit?
What Medical Expenses Can I Deduct on My Tax Return?
Health Savings Accounts and Taxes