Because 2015 is the first year Californians will have to provide information about their health insurance on their tax returns, the U.S. Department of Health and Human Services released a fact sheet detailing what they'll need to know, officials announced.
In the coming weeks, the administration will continue to provide added resources to help consumers prepare for tax filing season, including online tools to help individuals connect with local tax preparation services and determine if they are eligible for an exemption, officials said.
More than three quarters of tax filers will just need to check a box on their tax return indicating they had health coverage for all of 2014, but there will be added steps for those who bought coverage through the Health Insurance Marketplaces, or decided not to enroll in coverage. Those who had basic health insurance in 2014 meeting the Minimum Essential Coverage requirement for the Affordable Care Act won't receive any new forms in the mail and won't have to fill out new forms when they file their 2014 income tax returns.
What consumers need to know:
When you file your tax return, you'll need to check a box indicating you and your family had health insurance for all of 2014. Types of coverage that meets the Affordable Care Act's standards include: Most job-based plans, including retiree plans and COBRA coverage; Medicare Part A or Part C; Medicaid; the Children's Health Insurance Program (CHIP); most individual health plans you bought outside the Marketplace, including "grandfathered" plans.; If you're under 26, coverage under a parent's plan.
Filing electronically is the easiest way to file a complete and accurate tax return. Last year, some 85 percent of taxpayers e-filed. Electronic Filing options include free Volunteer Assistance, IRS Free File and professional assistance. Helpful resources available include the IRS Resource Guide: Health Care Law: What's New for Individuals & Families.
Last year millions of people purchased coverage through the Health Insurance Marketplace, and most benefited from a tax credit to lower their monthly premium. Those enrolled in such a plan must provide some basic information about their health insurance when they file their taxes. All Marketplace consumers will receive a new statement called a Form 1095-A that includes all the information they need about their coverage to file their return. Form 1095-A will come by mail by early February. In most states, you can also download a copy of your statement through your Marketplace account starting in late January or early February. You must wait for your Form 1095-A to arrive before filing your taxes. If it hasn't come by early February, you should contact the Marketplace Call Center at 1-800-318-2596. TTY users should call 1-855-889-4325.
When you get your Form 1095-A, check the information on it like the number of people in your household for accuracy. If you find an error, call the Marketplace Call Center at 1-800-318-2596 to find out how to get a corrected form.
Keep your Form 1095-A with your other important tax information, like your W-2
If a tax credit lowered your monthly health insurance premiums for 2014, you will use your Form 1095-A to input some basic information when you file your taxes. When you signed up for health insurance, you had to estimate your 2014 income, which determined the size of your tax credit. Now, you must compare your estimated income with your actual income which could impact the final amount of your tax credit, as can a change in your income or household size during the year. You may see a smaller refund or owe money back if you underestimated your income. You may also get a bigger refund if you overestimated you income.
If you owe money back, there are several repayment options available.
If you did not receive a tax credit to lower your monthly premiums in the Marketplace, you can visit HealthCare.gov/taxes/tools/ to get information you'll need to enter into your tax forms to see if you might qualify.
If your Marketplace coverage started partway through 2014 and you were uninsured earlier in the year, or if you were uninsured for only a short period of time during the year, you may be eligible for an exemption from the requirement to have health coverage. You can claim the exemption on your tax return when you file. The process is fast and easy, requiring only that you select the exemption that applies to you and enter the corresponding code.
Available helpful resources:
HHS Fact Sheet: 3 Tips About Marketplace Coverage & Your Taxes.
Use a tool to get information you may need to determine your 2014 premium tax credit.
Learn more about your taxes if you had a 2014 plan through the Health Insurance Marketplace.
IRS Resource Guide: Health Care Law: What's New for Individuals & Families.
Learn more about Payment Plans, Installment Agreements and Offers in Compromise.
While those who can afford health coverage but chose not to buy it may have to pay a fee, individuals who could not afford coverage or met other conditions can receive an exemption. If you qualify, receiving an exemption is simple and easy, and means you won't have to pay a fee. You can claim most exemptions on your tax return, but some exemptions are only available through the Marketplace.
There are a variety of exemptions available, including if:
The cost of coverage was too high. This applies to you if the lowest priced plan available to you would have cost more than 8 percent of your income. Visit HealthCare.gov/taxes/tools for information you may need to claim the 2014 unaffordable coverage exemption.
You were uninsured for only a short period of time.
You experienced a hardship, such as if you had medical expenses that resulted in substantial debt, if a close family member passed away, or if you experienced domestic violence, among other hardships. You will need to apply to the Health Insurance Marketplace to qualify for this exemption.
When you file your taxes, you will enter information about the months you had coverage and any exemptions you qualify for on your tax forms. If you could have afforded coverage in 2014 but chose not to buy it and you don't qualify for an exemption you will have to pay a fee with your federal tax return. The fee is based on your income and on how many months you didn't have coverage.
If you didn't have health coverage for all of 2014, you'll pay the higher of $95 per adult and $47.50 per child, without coverage, limited to a family maximum of $285, or 1 percent of your income, subject to certain caps.