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As April 15th draws closer and tax season has many of us rushing to complete our tax returns, we’re faced with reporting our health insurance purchases in 2014. This year’s tax season marks the first time people will be asked for information regarding their health insurance. While this may sound scary or complicated, it may be simpler than you think. For the most part all Americans will fall into one of three categories and the IRS pretty clearly lays out what we need to do when filing in each situation.1040
According to the IRS, three out of four taxpayers will simply check one box on their tax return to show that they had health coverage for all of 2014 that met the ACA’s Minimum Essential Coverage requirement through a “non-marketplace” source. This includes individuals/families that obtained coverage through most job-based plans, COBRA, Medicare Part A or Part C, Medicaid, CHIP, most “non-marketplace” individual plans, and VA and TRICARE.
The second category of tax payers will be those that purchased their health insurance through the Health Insurance Marketplace in 2014, which for Colorado taxpayers will be Connect for Health Colorado. These consumers should have received a Form 1095-A in the mail sometime in early February. These forms will need to be completed with the necessary information and will let the IRS know if you received the correct tax credits lowering your premiums last year.
The last category of taxpayers will be those that did not have health coverage in 2014. If it is determined that an individual could afford health coverage, but simply did not purchase it, and did not qualify for an exemption, they will owe a penalty to the IRS. However, individuals who could not afford coverage or met other conditions, can receive an exemption and will not owe a fee to the IRS.
Hopefully, this will be an uneventful tax season for you and your family, and you will be able to navigate the new tax laws regarding the Affordable Care Act with ease. For more in depth information about the new laws and how they apply to your federal income taxes, please visit HealthCare.gov. Also, you may want to consider consulting your tax professional with any additional questions or concerns. Good luck and Happy Tax Season!