Health Insurance & Your Taxes
Frequently Asked Questions
What is health care reform?
The Affordable Care Act (also known as Obamacare) requires Americans and legal residents to have health insurance. In addition, large employers are required to offer affordable health insurance that meets minimum value requirements. The IRS has said it will not accept e-filed 2017 tax returns that do not indicate whether a household had health insurance coverage, had a coverage exemption, or will pay the tax penalty.
What is the penalty for not having health insurance?
The penalty for not having health coverage in 2017 is 2.5% of household income above the filing threshold or $695 per adult and $347.50 per child under 18, whichever is greater. Note: Penalty is capped at the national average premium for a Marketplace Bronze level plan.
How can I get insurance?
Liberty Tax® can help you understand the tax implications of ACA. To learn more about health insurance and to enroll in a plan, visit the Marketplace.
Do I have to buy insurance from the health care Marketplace?
No. Most people can keep their current insurance policy, including those covered under Medicare, TRICARE, or employer sponsored insurance. However, this coverage must meet the minimum essential coverage or minimum value requirements set by the Affordable Care Act.
Is health insurance from the Marketplace free?
No. However, the Marketplace is the only place where you can apply for subsidies to help lower your health care costs. The Marketplace can also help you figure out if you are eligible for Medicaid.
When is the next open enrollment period?
Open enrollment for 2018 health insurance coverage runs from November 1 to December 15, 2017.
Can I sign up for health insurance outside of open enrollment?
Experiencing major life changes can make you eligible for a special enrollment period, such as:
- having a child, adopting, or placing a child up for adoption
- moving outside of your previous insurance plan’s area
- gaining citizenship or lawfully present status
- being a member of a federally recognized Indian tribe, or as an Alaska Native
- being released from incarceration
- involuntarily losing previous health insurance coverage
- if already enrolled in an individual Marketplace plan and changes in income affect your eligibility for health insurance subsidies
What if I can’t afford insurance?
Check to see if you qualify for a federal subsidy to help with the cost of health insurance applied for on the Marketplace. You can also click on HealthCare.gov Exemption Screener to see if you qualify for coverage exemption for being uninsured.
Since the amount I would pay for health insurance is based on my income, do I have to prove how much money I earn?
Yes. The Health Insurance Marketplace will verify your income through your tax return on file with the IRS, Equifax, or by reviewing paystubs.
Since subsidies are based on my income, what happens if my income changes during the year?
You should log into your Marketplace account and report any changes to your income or family size in order to prevent any confusion when it’s time to file taxes.
How can I get a subsidy?
Subsidies are available only through the Health Insurance Marketplace. You can use the subsidy calculator at the site to help determine if you qualify for any subsidies that will help reduce insurance costs for you and your family.
Can I qualify for subsidies even if I don’t pay taxes?
Yes. However, if you receive an advanced premium tax credit then you will be required to complete a tax return, even if your income is below tax filing threshold.
Is anyone exempt from the health insurance requirement?
If you did not have health care coverage starting January 1, 2017, you may be subject to a penalty when you file your taxes, unless you qualify for one of the following exemptions:
- you are a member of a federally recognized Native American tribe
- you are a member of a federally recognized health care sharing ministry
- you are a member of a recognized religious sect with faith-based objections to health insurance
- you are incarcerated
- you are an undocumented immigrant living in the U.S.
- you were only uninsured for less than 3 months during the year
- the lowest cost plan available through the Health Insurance Marketplace would cost more than 8.16% of your income
- your income is too low to be required to file a tax return
- you earn too much to qualify for Medicaid, but not enough to qualify for health insurance subsidies, and reside in a state that did not expand Medicaid
- you experienced a hardship which prevented you from acquiring health insurance
How can I apply for an exemption?
Click on HealthCare.gov Exemption Screener to see if you qualify for coverage exemption. Click here to learn more about health coverage exemptions, how to apply and access exemption form.
Are businesses required to offer insurance to employees?
Yes, businesses with 50 more full-time employees are required to offer insurance to employees. Businesses that do not offer insurance coverage to employees could face tax penalties. Smaller businesses, or businesses that do not meet the threshold requirement for full-time employees, are not required to offer health insurance to employees.
If my employer offers health insurance, can I still use the Marketplace?
Yes. However, you cannot qualify for any subsidy programs unless your employer offers coverage that isn’t affordable or doesn’t meet minimum value requirements. In addition, your employer cannot contribute to your premiums if you purchase a Marketplace plan.
Are there tax subsidies available for smaller employers who offer health insurance to full-time employees?
Yes. For smaller companies that want to offer insurance to employees, tax credits are available to offset part of the costs if the company purchases coverage through the SHOP Marketplace.
I am the parent of a college student. Can I keep my child on my health plan?
If your child is under the age of 26, you can keep him or her on your health insurance plan. Those over the age of 26 will need to have their own qualified health plan or qualify for a coverage exemption to avoid a penalty on their taxes.