“Everyone has important decisions to make concerning health care coverage in 2014,” said the IRS. “Starting in 2014, you must choose to either have basic health insurance coverage (known as minimum essential coverage) for yourself and everyone in your family for each month or go without health care coverage for some or all of the year. If you don’t maintain health insurance coverage, you will need to either seek an exemption or make an individual shared responsibility payment for the period that you are not covered with the 2014 income tax return you file in 2015.”
• health insurance coverage provided by an employer (including COBRA and retiree coverage),
• health insurance coverage purchased through a Marketplace,
• coverage bought directly from an insurance company.
If taxpayers purchase health insurance coverage through the Marketplace, they may be eligible for financial assistance including the premium tax credit, which will help lower the out-of-pocket cost of their monthly insurance premiums.
Qualifying coverage does not include certain coverage that may provide limited benefits, such as coverage only for vision care or dental care, workers’ compensation, or coverage only for a specific disease or condition, the
However, some hardship exemptions from the law are available. “If you choose to go without coverage or experience a gap in coverage, you may qualify for an exemption if you do not have access to affordable coverage, you have a gap of less than three consecutive months without coverage, or you qualify for one of several other exemptions,” said the
If taxpayers (or any of their dependents) do not maintain coverage and do not qualify for an exemption, they will need to make an individual shared responsibility payment with their tax return, the
• 1 percent of household income that is above the tax return filing threshold for the taxpayer’s filing status, such as Married Filing Jointly or single, or
• The family’s flat dollar amount, which is
The individual shared responsibility payment is capped at the cost of the national average premium for the bronze level health plan available through the HealthCare.gov Marketplace in 2014. Taxpayers will have to make the payment when they file their 2014 federal income tax returns in 2015.
Although many of the tax provisions included in the law went into effect on
The Health Care Tax Tips, which are now available at IRS.gov/aca, include:
• The Premium Tax Credit – Learn the basics of the Premium Tax Credit, including who might be eligible and how to get the credit.
• The Individual Shared Responsibility Payment – An Overview – Provides information about types of qualifying coverage, exemptions from having coverage, and making a payment if you do not have qualifying coverage or an exemption.
• Three Timely Tips about Taxes and the Health Care Law – Provides tips that help with filing the 2013 tax return, including information about employment status, tax favored health plans and itemized deductions.
• Four Tax Facts about the Health Care Law for Individuals – Offers basic tips to help people determine if the Affordable Care Act affects them and their families, and where to find more information.
• Changes in Circumstances can Affect your Premium Tax Credit – Learn the importance of reporting any changes in circumstances that involve family size or income when advance payments of the Premium Tax Credit are involved.
In addition to Health Care Tax Tips, the IRS.gov/aca Web site offers informative flyers and brochures, Frequently Asked Questions and in-depth legal guidance regarding the tax provisions of the Affordable Care Act.
Individuals interested in receiving copies of
Health Insurance Marketplace Coverage OptionsIf some of your clients don’t have health insurance coverage, or if they have it but want to find out about other options; help is available at the
An open enrollment period to get coverage for 2014 through the Marketplace began on
When individuals visit the Marketplace, they can fill out one Marketplace application to learn if they can get lower costs based on their income, compare coverage options side-by-side, and if they choose, they can enroll in health insurance coverage.
If they purchase coverage through the Marketplace, they may be eligible for the premium tax credit. This refundable tax credit helps people with moderate incomes afford health insurance coverage they purchase through the Marketplace.
If taxpayers are eligible for the credit, they can choose to “get it now” by having some or all of the credit paid in advance. These payments go directly to their insurance company to lower what they pay out-of-pocket for your monthly premiums during 2014. Or they can “get it later” by waiting to get the credit when you file your 2014 tax return in 2015.
For more information about your coverage options, financial assistance and the Marketplace, visit HealthCare.gov. Find out more about the premium tax credit, as well as other tax-related provisions of the health care law at www.IRS.gov/aca.
Premium Tax CreditThe premium tax credit can help make purchasing health insurance coverage more affordable for people with moderate incomes. To be eligible for the credit, taxpayers generally need to satisfy three rules.
First, they need to get health insurance coverage through the
Second, they need to have household income between one and four times the federal poverty line. For a family of four for tax year 2014, that means income from
Third, they can’t be eligible for other coverage, such as
If a Marketplace determines that they’re likely to qualify for the tax credit at the time they enroll, they have two choices: they can choose to have some or all of the estimated credit paid in advance directly to their insurance company to lower what they pay out-of-pocket for their monthly premiums during 2014. Or, they can wait to get all of the credit when they file their 2014 tax return in 2015.
If they wait to get the credit, it will either increase their refund or lower their balance due.
If they choose to receive the credit in advance, changes in their income or family size will affect the credit that they are eligible to receive. If the credit on the tax return they file in 2015 does not match the amount they have received in advance, they will have to repay any excess advance payment, or they may get a larger refund if they are entitled to more. It is important for your clients to tell the Marketplace about any changes in their income or family size as they happen during 2014 because these changes will affect the amount of their tax credits.
For more information about the individual shared responsibility provision and the premium tax credit, visit IRS.gov/aca. Visit the
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