How Will My Health Insurance Affect My Taxes?

Since the passing of the Affordable Care Act (ACA) a few years ago, it became required that all American citizens and legal residents have a health insurance plan for the entire year of 2014. If you were not covered by a health insurance plan at any time during 2014, you may owe the Internal Revenue Service (IRS) money due to a tax penalty. Filing your taxes this year is going to be somewhat different because of the ACA, and we at Elite Insurance Solutions are ready and prepared to assist you with reporting your health insurance. We would like to answer a few questions about how your health insurance is going to affect your taxes, according to the U.S. HealthCare homepage.

HOW WILL I REPORT MY HEALTH CARE COVERAGE ON MY 2014 TAX RETURN?

There are a variety of different forms you will use to report your health insurance coverage. Depending on your situation, the following forms will be used when you file your federal income taxes:

FORM 1095-A HEALTH INSURANCE MARKETPLACE STATEMENT

If you purchased your health insurance through the Health Insurance Marketplace Exchange, you will receive this form in the mail. This form gives you all of the information you will need to complete Form 8962 for the Premium Tax Credit. You should receive a copy of this form for every member of your household who has a health care policy through the Marketplace Exchange.

FORM 1095-B HEALTH COVERAGE

Sent to you by your insurance provider, this form has the information you will need to report on your tax return to prove you, your spouse, and any dependents had health insurance during the past year.

FORM 1095-C EMPLOYER-PROVIDED HEALTH INSURANCE OFFER AND COVERAGE

Provided to you by your employer, this form contains information about the health care coverage offered to you by your employer.

FORM 8962 PREMIUM TAX CREDIT

If you purchased your health insurance through the Marketplace Exchange, you may be eligible for a tax credit. Your Form 1095-A will give you the details on the credit you will receive.

FORM 8965

You will need to fill out this form if you are exempt from health care coverage.

WHAT ARE THE TAX PAYMENT EXEMPTIONS?

If any of the following is true for you, you could be exempt from the tax payment:

you were the only uninsured for less than three months of the year
your lowest priced coverage would cost you more than 8% of your income
your income is too low to file a tax return
you belong to a recognized religious group with objections to health insurance
you are a member of a recognized health care sharing system
you are a Native American eligible for services through an Indian Health Services provider
you are incarcerated

WHAT IS THE TAX PENALTY FOR NOT HAVING HEALTH INSURANCE?

If you did not have health insurance during the past year, you will owe a tax payment. For the year 2014, the tax payment will be whichever of the following two methods (the Flat Fee and the Percentage of Household Income) is higher:

* a Flat Fee of $95 per adult and $47.50 per child, with a family maximum of $285
* the Percentage of Household Income is one percent of your taxable income over the maximum filing amount for your filing status, but not over the average cost for the bronze level health plan through the Marketplace Exchange ($2488 annually for an individual and $12,240 annually for a family of five or more members).

Have more questions or concerns about how your health insurance will affect your taxes this year? Contact Elite Insurance Solutions to speak to one of your agents about these important changes.