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Affordable Care Act and tax implications

The Affordable Care Act (ACA) was passed by Congress and supported by President Obama in 2010.  As a result, October 1, 2013, through March 31, 2014, individuals and families are being given their first opportunity to sign up for federally mandated health insurance.  Individuals and families can obtain health insurance –

Doris Jones, Liberty Tax Snellville

• Through their employer (if it is offered)

• Through the Health Insurance Marketplace (a government program)

• Through some other means

In an effort to make it affordable, the government is helping pay the insurance premiums through the Premium Tax Credit.  In order to qualify for the Premium Tax Credit, an individual or family has to have household income less than 400% of the Federal Poverty Level in 2013

• A single individual could make up to approximately $45,000

• A family of four could make up to approximately $94,000 and sign up for health insurance through the Health Insurance Marketplace located on HealthCare.Gov.

Things to consider for 2013 –

Open Enrollment for Health Insurance Marketplace: 

• Open enrollment period began Oct. 1, 2013

• You may be able to get advance payments of the premium tax credit that will immediately help lower your monthly premium

Filing Requirement: 

• If you are not required to file a Tax Return, you do not need to file a 2013 federal tax return to establish future eligibility or qualify for future financial assistance, which includes advance payments of the Premium Tax Credit

W-2 Reporting of Employer Coverage: 

• Certain employers are required to report the health insurance coverage they provide. 

• The amount of health care coverage is reported by your employer in Box 12 and identified by Code DD on your Form W-2 is not taxable

Itemized Medical Expenses: 

• Your unreimbursed medical and dental expenses now must exceed 10% of your Adjusted Gross Income (AGI) on your 2013 tax return

• The amount for those 65 and older for tax years 2013 through 2016 will still remain 7.5% of your Adjusted Gross Income (AGI)

Things to consider for 2014 – Premium Tax Credit

•  To claim this credit, you must get insurance through the Marketplace

•  It is a Refundable Credit on the Tax Return

• If they qualify for the tax credit, it will be paid directly to the insurance company throughout the year to reduce tax payer premiums

• The amount they qualify for will be based on their last tax return and where they fall on the Federal Poverty Level or

• Wait to reconcile the payments on your 2014 tax return when you file in 2015 if you choose to have advance payments sent to your insurer

Individual Shared Responsibility Payment

• Starting January 2014, you and your family must 

•  Have health care coverage

•  Have an exemption from coverage

• Make a payment when you file your 2014 tax return in 2015. 

Most people already have qualifying health care coverage and will not need to do anything more than maintain that coverage throughout 2014.

Change in Circumstances

• If you are receiving advance payments of the premium tax credit to help pay for your insurance coverage, you should report changes such as income or family size to your marketplace. Reporting changes will help to make sure you are getting the proper amount of assistance. 

If an individual or family chooses not to get health insurance, and they do not qualify for an exemption, they will have to pay a penalty.  In 2014, an individual will have pay a “shared responsibility” –

• Penalty of $95 or 1% of taxable income, whichever is greater

• While a family of 4 will have to pay $285 or 1% of taxable income

• Penalties increase every year until they are equal to the bronze plan

• Just like the Premium Tax Credit, Penalties are also reported and collected through the tax return

While this is all very confusing, each specific case is different and we are here to help!  Please feel free to contact me to find out more about how this will affect you!

Doris Jones
Liberty Tax Snellville
2189 Scenic Hwy (Next to Pizza Hut)
Snellville GA 30078
(770) 736-1400