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Health Insurance & Your Taxes 101

The passing of the Affordable Care Act created an intersection between health care and taxes. The ACA is a tax law that requires all Americans to have health insurance or a coverage exemption. The law requires health plans to meet minimum criteria and allows individuals to acquire health insurance even with a preexisting condition.

All tax filers must report their health coverage on their tax return. Those who do not have health insurance coverage will pay a tax penalty if they do not qualify for a coverage exemption. The penalty will be enforced by the IRS.

Important ACA Dates & Deadlines

November 1, 2017: Open Enrollment begins for 2018 coverage

December 15, 2017: Last date to enroll for coverage that begins in 2018

December 31, 2017: Coverage ends for all 2017 Marketplace plans

January 1, 2018: Coverage for 2018 can begin

April 17, 2018: Last day to file taxes or apply for a 6-month filing extension

 

Penalties & Exemptions
Under ACA, individuals and businesses may face a tax penalty for not having health insurance. The penalty for individuals for the 2017 tax year is $695 per adult and $347.50 per child under 18 or 2.5% of household income, whichever is greater. The IRS has said it will not accept e-filed 2017 tax returns that do not include health insurance information.
Businesses with 50 or more full-time employees during the 2016 tax year are required to offer health insurance coverage or face a tax penalty.

 

CLAIMED DIRECTLY ON THE TAX RETURN NO EXEMPTION CERTIFICATE NUMBER (ECN) REQUIRED

  • Insurance is unaffordable (>8.16% of household income)
  • Uninsured no more than 2 consecutive months
  • Certain noncitizens and U.S. citizens living abroad, or not lawfully present
  • Individual resides in a state that did not expand Medicaid and income <138% FPL
  • No filing requirement - income too low
  • Member of a recognized health care sharing ministry
  • Incarceration
  • Member of a federally-recognized tribe or eligible for services through an Indian Health Services Provider
  • Aggregate self-only coverage is considered unaffordable
  • Member of a recognized religious sect
  • Member of tax household was born, adopted, or died in 2017

 

REQUIRES ECN FROM THE MARKETPLACE. APPLICATIONS MUST BE MAILED

  • Members of a religious sect with religious objections to health insurance coverage
  • Most Hardships
  • DurationGenerally, at least one month before and after hardship
  • When to ApplyUp to 3 years after the month of hardship
  • ENTER ECN ON FORM 8965, PART 1
Tax Credits

Persons who enroll in a Marketplace plan may receive a Premium Tax Credit, also known as a tax subsidy, which are available to individuals and businesses to lower the cost of having insurance. This credit must be reconciled on your tax return.

FAQ

Still have questions? Need some clarification? We’ve got you covered. Get answers to your commonly asked questions here.