What You Need to Know About Healthcare and Your Taxes

Taxes are confusing enough, but they got ever more complicated with the Affordable Care Act (ACA), or Obamacare. There are many regulatory pieces here from penalties to subsidies, but it doesn’t stop there as a lot of new laws have gone into effect.
So, moving forward, what should you know about healthcare and your taxes?

New Healthcare Tax Forms

If you filed your taxes on time this year, your accountant may have made you aware of multiple forms that were introduced recently. If you paid for your insurance coverage the previous year, you’ll need a Health Insurance Marketplace Statement or a 1095A.

Know About Healthcare and Your Taxes - Tax FormsThis form will have information regarding the purchase of insurance, who was covered, and for how long. It will be broken down to a month-to-month basis to display the information in detail, according a personal injury lawyer.
To add to that, the IRS introduced two new forms this year, the 1095-B and 1095-C. All these forms outline the coverage details to ensure that you avoid getting penalized.

 

The only difference is that the 1095-B is provided by the insurance company itself, while the 1095-C will be forwarded by your employer (but only if 50 or more people are employed full-time).
Employers are required by law to provide affordable health insurance coverage, so these new forms will provide evidence of compliance.
If you purchased insurance through your employer, you won’t need to fill out the 1095-B or 1095-C forms. However, you’ll need to tick the box that states that you received full coverage.

Premium Tax Credits

If you got tax credits to purchase insurance from the marketplace, you’ll need healthcare tax forms to accommodate subsidies and file your tax return.
Even if you’re not required to file a return, you have to file a federal income tax return if you benefited from tax credits. Further, without filing a return, there’s no way to know if you owe or are owed government insurance subsidies.
It works like this. When you buy insurance through the marketplace, you have to estimate your income for the year. The government will then use this information to determine subsidies. These subsidies can be collected when you file your tax return or receive it in advance to help you pay the premiums.
In situations where you may have ended up earning more than anticipated, you’ll have to pay back some of the subsidies that you received. At the same time, if you earned less than expected, you might be eligible for more subsidies as part of your tax refund.

Penalties

If you didn’t have insurance the previous year, you will be in for a surprise when you file your taxes (and it won’t be pleasant). This means you will have to pay a penalty that’s 2.5% of your household income. This works out to being something like $347.50 per child plus $695 per adult (whichever is more).
But there are some exemptions. If you didn’t have coverage for a couple of months, you can claim a short gap exemption (among others). It may seem complicated now, but after a couple of years, there’ll be a better understanding of how the ACA works and how healthcare costs are paid. An accountant can also help you with your healthcare insurance and taxes.

 

Author Bio: Troy Martin

Troy has been married for 27 years to his wife Shauna. They have six active children and they love to participate in many extracurricular activities including: boating, flying, mountain biking, hunting, fishing, horseback riding, and adventure motorcycling (pretty much whatever will get them outside).

Troy has a vast amount of experience in the following business sectors: medical, dental, manufacturing, retail, restaurants, construction, farming and ranching.

He is a shareholder in Cook Martin Poulson a Utah Accounting Firm.

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