Affordable Care Act (ACA)
Starts with the 2014 Tax Returns
Things You Must Do
- Report Health Care Coverage
- Claim an Exemption from Coverage
- Make a Shared Responsibility Payment with your tax return
Form 8962 Premium Tax Credit (PTC)
Form 1095-A Health Insurance Marketplace Statement
Individual Insurance Penalty
A major feature of the law is a ‘mandate’ requiring most Americans to carry health insurance. Do you have coverage? Yes or no? If no, you may need to compute your penalty. Take the lesser of $95 per non-insured adult and $47.50 for each child under 18; or $285. Then, pay the greater of this amount or your household income minus $10,150 if filing single or $20,300 for married filing jointly. However, your penalty can’t exceed the “national average bronze level premium,” around $2,500. Got it?
If you get confused, you won’t be alone. In fact, the IRS says it has to trust tax filers to answer truthfully whether they had health insurance or need to pay a penalty. Some taxpayers are likely to skip the question about health insurance. If you don’t say yes or no, the reasoning goes, how can they penalize you? Tax return preparation software may or may not default to yes or no.
Remember, though, that you must sign your tax return under penalties of perjury. If you must pay a penalty, you pay it as part of your tax bill. That will make some people unhappy. Still, the flak from people who got subsidies but are getting smaller refunds than they thought–or even owing money–may be greater.