When you file your tax return you are required to provide the Internal Revenue Service with information about the health insurance coverage you had during the tax year. Consequently, you may find filing your taxes more complicated. Depending on where you get your health insurance, you may have to submit additional details and tax forms.
Minimum Essential Health Care Coverage
In some cases, the only thing that you will need to do is to check the box on line 61 Form 1040, line 38 Form 1040A, or line 11 Form 1040EZ to show that you are enrolled in a health insurance plan. Under Obamacare, you must have minimum essential health insurance coverage for yourself, your spouse if you file a joint return, and any individuals you claim as dependents on your tax return.
Unless you qualify for an exemption, you must have had health insurance coverage for every month during the tax year. It doesn't matter whether you have employer-sponsored health insurance or get insurance through the health insurance marketplace or a government program such as Medicaid.
You will need to attach additional forms to your return if you qualified to receive a government subsidy to help pay for the cost of health insurance. Along with your tax return, you must file Form 8962 to take the Premium Tax Credit. This also is the case if an advance payment of the premium tax credit was paid to your insurance provider during the tax year for you or any dependents you claim who were enrolled in a plan through a health insurance exchange.
Health Insurance Subsidy
Subsidies are based on a family's estimated income for the tax year. Therefore, if you report a higher income on your tax return, you may have to pay back a portion of the subsidy. The money can come out of any tax refund you are due. If the income you report on your tax return is less than what you estimated, you may qualify for a larger tax refund.
You can avoid problems with incorrect subsidies by notifying your health insurance exchange during the year if your income changes. Based on the updated information you provide, the exchange will recalculate your subsidy for the remaining months of the year.
Health Coverage Exemptions
If you were not covered under a health insurance plan last year, you will have to pay a penalty unless you qualify for a health coverage exemption. You will need to complete and file Form 8965 if you are claiming a health coverage exemption on your tax return or were granted a coverage exemption by a state or federal health insurance marketplace.
Qualifying for an exemption means you won't have to have health coverage or pay penalty fees for the months the exemption applies. Some examples of exemptions for which you may be eligible include hardship exemptions, low household income, a gap in coverage of no more than two consecutive months, living abroad, or serving time in prison.
Proof of Coverage
If you and members of your household were covered under health insurance during the tax year, the provider must send you a Form 1095-A, 1095-B, or 1095-C listing who was enrolled in the health plan and the months they were covered. The Form 1095 you receive depends on the type of health insurance plan under which your are covered. For example, if you are enrolled in an employer-sponsored health plan – especially if you work for a large employer – you will receive proof of coverage on Form 1095-C. The form provides information you need to file Form 8962 with your tax return.
For additional help filing your taxes, talk to a company like Tri Check Inc.