Open enrollment for the ACA began on November 1. Whether or not you have health care through the Affordable Care Act (ACA), you should know how it impacts you and your taxes. So we’re here to break it down for you as simply as possible in our second Taxes 101 blog.
What is the Affordable Care Act?
The Patient Protection and Affordable Care Act, commonly known as ACA or Obamacare, is a tax law that requires all Americans to have health insurance or face a health care tax penalty. This means if you have coverage through a job, Medicare, Medicaid or another source, or if you qualify for an exemption, you won’t have to pay that fee when you file.
Who qualifies for an exemption?
- If you’ve been uninsured for no more than two consecutive months
- If the lowest available plan exceeds 8.05% of your income
- If your income is low enough that you don’t need to file a tax return
- If you’ve experienced a hardship
How much is the fee?
If you’re NOT insured and NOT exempt, you will have to pay a tax penalty fee enforced by the IRS – and for 2015, it’s a pretty hefty one. In 2016, it will be even higher.
- 2015 – 2% of your household income OR $325 flat fee per adult and $162.50 per child, whichever is higher
- 2016 – 2.5% of household income OR $695 flat fee per adult and $347.50 per child, whichever is higher
Where do I enroll?
If you choose to enroll in an ACA plan for 2016, you can do so through the Health Insurance Marketplace. The Marketplace is a resource where individuals, families and small businesses can compare options and enroll in ACA coverage. Plus, when you buy health insurance here, you may qualify to receive a premium tax credit that lowers what you pay in monthly premiums. The credit is based on your household size and income.
For more information on the ACA, visit www.healthcare.gov.