Things to know about the new Health Care Law – “The Affordable Care Act”
The introduction of the new health care law – The affordable Care Act [ACT] has brought some changes that may affect your federal income tax filing for the new tax season. The Affordable Care Act requires that you and each member of your family have qualifying health insurance coverage for every month of the year, qualify for an exemption from the coverage requirement, or if either of the prior does not apply, the taxpayer would have to make an individual shared responsibility payment when filing their federal income tax return.
Taxpayers are responsible for themselves and anyone they can claim as a dependent. If a taxpayer and all dependents have qualifying health coverage for the entire year, s/he would not need to be concerned when filing their tax return. Qualifying health insurance includes coverage under most, but not all types of health care plans.
However, if taxpayers do not have qualifying health care coverage and they meet certain criteria, they might be eligible to claim an exemption from the requirement to have coverage. Most exemptions are available on your tax return, but some must be claimed through the insurance marketplace.
Further, if you could have afforded coverage but chose not to get it and you do not qualify for an exemption, you must make a payment called the individual shared responsibility payment when you file your return for choosing not to purchase coverage.
Premium Tax Credit
Taxpayers who purchased their coverage through a health insurance marketplace are eligible for assistance through the new premium tax credit. They should also receive Form 1095-A [Health Insurance Marketplace Statement] by early February. This credit gives taxpayers the option of choosing to either have their advance premiums paid upfront to their health insurers, to lower their monthly health care premiums, or receive a credit when filing their tax return. If the taxpayer chooses advance credit payments, s/he must file a federal tax return and reconcile the advance payments with the actual premium tax credit of which they are eligible to claim on their return. If their advance credit payments are in excess of the amount of the premium tax credit they are eligible for, they must repay some or all of the excess when filing their tax return.