What Does the Affordable Care Act (Obamacare) Mean for Me and My Taxes?
Note: As soon as any changes are made to the Affordable Care Act, we will update this page accordingly.
The Affordable Care Act requires that almost all U.S. citizens and legal residents (and their dependents) have health insurance for the entire year. Therefore, the IRS requires taxpayers to report their health insurance information on their tax return. 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 prepare and efile your tax return on efile.com, we will automatically report your health care information on the correct tax form(s).
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The details of the Affordable Care Act can be confusing, so check out any of the topics below and 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 payment for not having insurance when you file your tax return if you are one of the following:
What If I 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, there is no need to change anything about your tax situation. However, if you have private health insurance that's not through an employer), you may wish to check out the Health Insurance Marketplace (also know as the Exchange) in case you can find a better deal. You can get started at HealthCare.gov.
Do I Need to Change Any Changes to My Health Insurance Information If It's Through the Marketplace?
You should update your 2017 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. There will be instructions for updating your information on HealthCare.gov.
What is Minimum Essential Coverage?
The minimum essential coverage includes individual policies purchased on the Health Insurance Marketplace, job-based coverage, Medicare, Medicaid, CHIP, TRICARE and others. See more about this on HealthCare.gov.
Review enrollment and other important Affordable Care Act dates.
How Will I Report My Health Insurance Coverage on My Tax Return?
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!).
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What Forms Do I Need to Report My Health Insurance Information on My Return?
You will need to use one or more of the following information tax forms to report health insurance coverage on your tax return:
- Form 1095-A - Health Insurance Marketplace Statement - You will receive this form if you purchased health insurance via the Health Insurance Marketplace exchange in 2016. 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 will have the information needed to report on your tax return that you, your spouse, and any dependents, had qualifying health insurance coverage for some of the year or for the whole year.
- 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.
- Form 8962 - Premium Tax Credit - This form will be prepared for you when you prepare your return 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 - This form will need to be prepared by you if you are claiming that you are exempt from health care coverage.
What Can I Do If I Still Have Not Received My Form 1095-A?
You should contact the Marketplace from which you received health insurance and request a copy of your Form 1095-A. You are not required to send that form to the IRS when you file your tax return.
I Received a Letter from the IRS About My 2016 Marketplace Coverage. Why Did I Receive It?
Based on their records, the IRS received a Form 1095-A from your Marketplace and is informing you that you did not file a 2016 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 on your Marketplace coverage in 2017. For more information about the IRS health insurance letter, visit our Premium Tax Credit page.
What If I Don't (or Won't) Have Health Insurance?
If you can afford health insurance but choose not to buy it in any month during the Tax Year, you would 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. The payment may cause your tax refund to be lower, or 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 efile process.
Open Enrollment for 2017 health coverage has ended. Generally, you cannot enroll in a private health plan for the rest of 2017. However, if you need coverage for 2017, 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 still get coverage two ways if either of these 2 situations applies to you:
1) If you have had life changes such as the following:
- 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) You may be able to enroll in coverage through Medicaid and the Children's Health Insurance Program (CHIP). There is no limited enrollment period for these programs which provide free or low-cost health coverage to millions of Americans. You can apply any time. If you qualify you can enroll immediate, any time of year.
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 probably required to offer you health coverage. If they offer insurance to any employee, even if they have less than 50, then they must offer it to all employees.
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.
If you don't think you can afford to pay for health insurance, please read on.
What If I Can't 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.
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.
If you still cannot afford health insurance, or you choose not to purchase it, you must pay a tax payment.
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.
What Is the Federal Poverty Level?
The federal poverty guidelines are established each year by the U.S. Department of Health and Human Services. For 2016, the official poverty level for residents of most states ranged from $11,770 for an individual to $40,890 for a family of 8. This is based on the 2015 guidelines.
Important Health Insurance & Tax Dates
|Open Enrollment Starts for 2017 Coverage
||November 1, 2016
|Open Enrollment Ends for 2017
||December 15, 2016
|Coverage for 2017 starts
||January 1, 2017
2016 Tax Return Deadline
April 18, 2017
|Report Income and Household Changes to Marketplace
All Year 2017
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