Affordable Care Act Brings Changes to IRS Tax Forms

Written by Michelle Tabler, Alaska Regional Manager

The holidays are over and tax season has started. Better Business Bureau advises taxpayers to be aware of the Affordable Care Act (ACA) reporting requirements.

Tax Healthcare Blog 1.12.16

Every person filing a tax return will need to provide information on their health care coverage for the year. If you had qualifying coverage all 12 months, you may just need to check a box on your tax return. If you obtained coverage through your state’s Marketplace under the ACA, then you will receive tax form 1095-A to file with your taxes (and you must file a tax return in order to be eligible for future premium assistance). Exemptions are claimed when you file your tax return or through the Marketplace.

The ACA requires minimal essential coverage for each month of the year. Minimum coverage includes: employer provided health insurance; coverage provided through the Health Insurance Marketplace in your state; government-sponsored programs such as Medicare, Medicaid and veteran’s health care programs; policies purchased directly from insurance companies; and other health insurance coverage recognized by the Department of Health & Human Services.

People who purchased health coverage through their state’s Marketplace are in effect reconciling at tax time any advance payments of the premium tax credit paid on their behalf by the government. These credits are based on a sliding scale for those with household incomes between 100 and 400 percent of the federal poverty line based on family size, home address and the cost of health coverage in the area. Individuals who chose to accept advance credit payments for their health insurance premiums will reconcile at tax time. If the advance payments are lower than the actual premium tax credit then the taxpayer will receive the difference as a higher refund or lower tax due. If the advance payments were more than the actual credit, then the taxpayer will owe the difference.

Taxpayers who do not have qualifying health care coverage nor qualify for an exemption will be required to pay a shared responsibility payment when filing their tax return. The IRS includes a worksheet to help calculate this payment.

There are several individual exemptions from the requirement to have qualifying health coverage: annual premiums are more than eight percent of household income; the gap in coverage is less than three consecutive months; hardship that prevents obtaining coverage; or belonging to a group explicitly exempt from the requirement.

New this year, if you had insurance through your employer or were offered coverage, you may receive a form 1095-B or C. This is a good record of your insurance and may be needed if you are applying for some types of exceptions.

Taxes and ACA rules may be confusing to consumers, so if you plan to hire a tax preparer, check out the company at bbb.org. Be sure the preparer has the expertise you need and ask for the fees up front. Have all your information well organized for your appointment, including last year’s return, and list any question you may have. It will save you time and money.

Also, be alert to tax identity theft scams. According to the IRS, tax-related ID theft occurs when a person’s social security number has been stolen and used to file a fraudulent tax return to obtain the refund. BBB is encouraging consumers to file their tax returns as early as possible.

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