- The ACA is a tax law that requires all Americans to have health insurance or a coverage exemption. The law allows individuals to acquire health insurance even with a preexisting condition.
- All health plans must meet certain requirements and offer preventative services at no cost.
- Health care options are available through a Health Insurance Marketplace that offers guaranteed rates during an open enrollment period.
- Businesses may be required to offer insurance to their employees under the law.
- Tax credits, also known as tax subsidies, are available to individuals and businesses to offset the cost of having insurance.
The tax return is where health care meets taxes. All tax filers must report the value of their health plan on their tax return, and this will be enforced by the IRS. Those who do not have health insurance coverage will pay a tax penalty if they do not qualify for a coverage exemption.
- November 15, 2014: Open Enrollment starts for coverage in 2015
- December 15, 2014: Last date to enroll for coverage to start January 1, 2015
- December 31, 2014: Coverage ends for all 2014 Marketplace plans
- January 1, 2015: Coverage for 2015 can begin
- February 15, 2015: Open Enrollment for coverage in 2015 ends
- April 15, 2015: Last day to file taxes or apply for a 6-month filing extension
Under the ACA, individuals may face a tax penalty for not having health insurance or a coverage exemption. Businesses with 100 or more full-time employees during the 2015 tax year or 50 or more full-time employees during the 2016 tax year are required to offer health insurance coverage or face a tax penalty. The penalties by tax year for individuals are below:
- 2014: 1% of taxable household income or $95 per person, whichever is greater
- 2015: 2% of taxable household income or $325 per person, whichever is greater
- 2016: 2.5% of taxable household income or $695 per person, whichever is greater
- After 2016, the penalty will be increased on an escalating scale each year.
For example, a single individual with no dependents and an adjusted gross income of $38,208 would pay a tax penalty of $382 for having no health insurance coverage during the 2014 tax year.
If you did not have health care coverage starting January 1, 2014, you may not have to pay the tax penalty. Our ACA Exemption Guide can assist you in determining if you qualify for a coverage exemption. If you can prove one of the following coverage exemptions applies to you, your tax penalty may be waived.
- you are a member of a federally recognized Native American tribe
- you participate in a health care sharing ministry
- you are a member of a recognized religious sect with religious objections to health insurance
- you are incarcerated
- you are an undocumented immigrant to this country
- you are unemployed and without coverage less than 3 months during the year
- you have very low income and coverage is considered unaffordable for you (amount to pay for coverage would cost you more than 8% of your income)
- you do not file a tax return because your income is too low (in 2014, $10,000 for individuals and $20,000 for a family)
- if your income is up to 133% of the Federal Poverty Level ($15,521 for singles; $31,721 for a family of four – in the 48 contiguous states and DC, higher in Hawaii and Alaska – source: familiesusa.org)
- if you would qualify for Medicaid under the new income limits, but your home state has chosen not to expand Medicaid
- if you qualify for a hardship exemption
Your health plan must meet the ACA requirements for minimum essential coverage. Qualifying health plans include, but are not limited to, Medicare, Medicaid, TRICARE, and any plan purchased in the Marketplace. Your health insurance must provide you with the following services in order to be considered a sufficient plan under the ACA law. You may face a penalty if your health plan does not include:
- emergency services
- hospitalization (such as surgery)
- pregnancy, maternity, and newborn care
- mental health and substance use disorder services (such as behavioral health treatment and counseling services)
- ambulatory patient services (outpatient hospital care)
- prescription drugs
- laboratory services
- pediatric services
- preventative and wellness services (disease management)
- rehabilitative and habilitative services and devices (services for those with injuries or disabilities who need assistance recovering mental and physical skills)