We would like to provide some information to help you understand what the Affordable Care Act is and how it may affect you.
Most Americans will have to have health insurance in 2014 or pay a per month fee on their year-end federal income taxes for every month they go without coverage. Many Americans will be eligible for subsidized health insurance costing anywhere from 0% - 9.5% of their Modified Gross Adjusted Income.
Coverage
Minimum Essential Coverage is the type of coverage you'll need to avoid the fee for not having insurance under Affordable Care Act. In order to be in compliance with the law you must maintain minimum essential coverage throughout the year or pay a fee for each month you go without it (although you are allowed up to three months in a row each year without coverage, due to a coverage gap exemption).
The Affordable Care Act created a lot of new rules and regulations for health insurance, benefits, rights, and protections. Some types of health insurance are required to follow ACA rules and some aren't, in a general sense the ones that have to follow the rules are called minimum essential coverage. Please be aware that minimum essential coverage (MEC) is based on source rather than specific benefits.
Basically minimum essential coverage includes all Government and job based insurance and most private insurance. As a rule of thumb if you were allowed to keep your health insurance in 2014, bought major medical insurance on or off the marketplace, got covered through a public program, or got covered through work in 2014 you typically have minimum essential coverage.
To find out if your coverage qualifies as Minimum Essential Coverage Click Here
If you meet certain criteria, you could be exempt from the individual shared responsibility provision and will not have to obtain coverage or make a shared responsibility payment when you file your federal income tax return. Click here for more information.
You obtain exemptions from either the Marketplace or IRS depending on the type. All exemptions are reported on the tax return, although you are automatically exempt if you don't have to file a return because your income is below your filing threshold. Click Here for Facts about Health Coverage Exemptions.
To learn more on the types of exemptions available and whether they must be granted by the Marketplace or claimed on an income tax return filed with the IRS visit HealthCare.gov/exemptions.
Payments
The individual shared responsibility provision requires you and each member of your family to either have basic health insurance coverage (also known as minimum essential coverage), qualify for an exemption, or make an individual shared responsibility payment when you file your federal income tax return. It is important to remember that choosing to make the individual shared responsibility payment instead of purchasing minimum essential coverage means you will also have to pay the entire cost of all your medical care. You won't be protected from the kind of very high medical bills that can sometimes lead to bankruptcy.
If you must make an individual shared responsibility payment with your return, the annual payment amount is the greater of a percentage of your household income or a flat dollar amount, but is capped at the national average premium for a bronze level health plan available through the Marketplace. You will owe 1/12th of the annual payment for each month you or your dependent(s) don't have either coverage or an exemption.
For 2014, the annual payment amount is:
- The greater of:
- 1 percent of your household income that is above the tax return filing threshold for your filing status, or
- Your family's flat dollar amount, which is $95 per adult and $47.50 per child, limited to a family maximum of $285,
- But capped at the cost of the national average premium for a bronze level health plan available through the Marketplace in 2014. For 2014, the annual national average premium for a bronze level health plan available through the Marketplace is $2,448 per individual ($204 per month per individual), but $12,240 for a family with five or more members ($1,020 per month for a family with five or more members).
To read more on the Individual Shared Responsibility Provision Click Here
Facts about the Individual Shared Responsibility Provision
ACA Tax Provision for Individuals and Families
Credits
Starting in 2014, individuals and families can take a new premium tax credit to help them afford health insurance coverage purchased through an Affordable Insurance Exchange (also known as a Health Insurance Marketplace). The premium tax credit is refundable so taxpayers who have little or no income tax liability can still benefit. The credit also can be paid in advance to a taxpayer's insurance company to help cover the cost of premiums. We have provided links below for more information on the Premium Tax Credit.
The Premium Tax Credit Facts
Q & A's on the Premium Tax Credit
Health Care Tax Tips
Health Insurance Marketplace
