This year as you complete your federal income tax return, you’ll need to provide extra information, due to Obamacare.
The Affordable Care Act will require one of three things for the 2014 tax year:
- If you had health coverage for the entire year in 2014, you will be prompted to check the appropriate box on your tax return.
- If you were exempt or got assistance through a Marketplace, you will need to take additional steps. Those steps may include completing Form 8962 for claiming the Premium Tax Credit assistance. Or you may need to complete a different form to claim an exemption.
- If you are not exempt and chose not to buy health coverage, you will have to pay an extra tax or fee.
Those who are claimed as a dependent by someone else for healthcare purposes needn’t do any of the above.
How to Report Health Insurance on Tax Return
Most small business owners file their tax returns using Form 1040, Form 1040A or Form 1040EZ. Depending on which form you use, you will be asked to fill out some information on a certain line.
On Form 1040, the healthcare checkbox can be found on Line 61.
On Form 1040A, the healthcare checkbox can be found on Line 38.
And on Form 1040EZ, filers should direct their attention to Line 11.
How To Tell if You’re Exempt from the Healthcare Requirement
Healthcare.gov has a laundry list of exemptions, including low income, being a member of a Native American tribe or being incarcerated.
Depending on the exemption you may be able to claim it on your federal tax return. Form 8965 is the IRS form for claiming a healthcare exemption.
In other cases, you may have to apply separately via a different form, to claim the exemption.
Claiming an exemption is rather complex. The departments of Health and Human Services and Treasury will be rolling out tools for taxpayers ahead of this year’s filing deadline, April 15.
According to Health and Human Services (HHS) Secretary Sylvia M. Burwell:
“In the coming weeks, HHS will work with other agencies, tax preparers and community organizations to arm these consumers with the information they need to know as they prepare to file their taxes. We will also be providing helpful tools so that the millions of taxpayers who qualify for an exemption can receive one.”
The government also says that it will “reach out” via emails, phone, and text messages “to people who got coverage through the Health Insurance Marketplace with personalized information that is most relevant to their tax status.”
Minimum Essential Coverage
You are required to have what the government defines as “minimum essential coverage.”
But the IRS goes on to point out that most health care coverage that people have meets the minimum essential coverage requirement.
Minimum essential coverage includes:
- Health care coverage provided by your employer,
- Health insurance coverage you buy through the Health Insurance Marketplace,
- Many types of government-sponsored health coverage including Medicare, most Medicaid coverage, and most health care coverage provided to veterans and active duty service members, or
- Certain types of individual policies you buy directly from an insurance company.
The instructions for Form 8965 have more information on what qualifies as minimum essential coverage.
Premium Tax Credit for Healthcare
If you, your spouse, or a dependent enrolled in health insurance through the Marketplace, you may be able to claim a special tax credit called the Premium Tax Credit.
Instructions for qualifying for and claiming the Credit are contained on Form 8962. (As of this writing, Form 8962 is still a draft and not finalized.)
In the meantime, HHS and the IRS have already made several resources available. They include guides for people who may not be eligible to check that one box on their tax form, or who may have to file additional forms.
For more information, see the Affordable Care Act tax provisions on the IRS website. Or visit Healthcare.gov.
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