Tax guide

Affordable Care Act

The Affordable Care Act (ACA) is a health care reform law that was passed in 2010. The ACA has three main goals:

  • Make affordable health insurance available to more people
  • Expand the Medicaid program
  • Lower the costs of healthcare by supporting innovative methods of medical care

When you hear about the ACA (or “Obamacare,” as it’s often referred to), other aspects of the law may come to mind. The federal healthcare marketplace (or exchange), the Premium Tax Credit (PTC), and the penalty for not having healthcare coverage are well-known products of the law.

You can dive deeper into those concepts by using the links to the left, but before you do, here are some important things to remember about the ACA.

Provisions and rules of the ACA vary from state to state

To a certain extent, states maintain the right to pursue the goals of the ACA on their own terms. For example, not all 50 states have adopted the ACA’s goal for people who make below 133% of the federal poverty level to qualify for Medicaid based on income alone.

If you want to find out your qualification for certain healthcare benefits, check your state’s policies.

The penalty for not having healthcare coverage is still in place, but is currently at $0 on the federal level (some states differ)

Seems a bit unnecessary, doesn’t it? The penalty for individuals who don’t have health insurance remains at zero, but could be changed to a higher amount in the future.

As we just pointed out, however, each state is different. Be sure to check with your own state’s policies to see if you will owe a penalty for not having health insurance.

Should the penalty return to a significant amount, there are 14 exemptions that can excuse you and your family from being insured. (If your state still has the health insurance mandate, check their website for allowed exemptions.)

Note: Employers with 50 or more employees are still required to provide health insurance for their employees, and not doing so would result in an employer shared responsibility payment (in most cases).

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Taxpayers are required to report their health insurance (or lack of it) on their tax returns

When you file your taxes, you’ll be asked whether or not you were insured for the entire year. Since there’s no penalty for not being insured, your answer won’t affect your taxes owed or your refund, but you’re still required to report if and when you weren’t covered.

To see when you were covered and by which organization, check any Forms 1095 you’ve received:

  • Form 1095-A shows monthly coverage from the Health Insurance Marketplace and qualifies you for the Premium Tax Credit
  • Form 1095-B shows monthly coverage from your healthcare provider
  • Form 1095-C shows monthly coverage from some employer-provided insurance

Some taxpayers may receive multiple forms, depending on when and how they were insured. Keep these Forms 1095 for your records, and use them as needed to report healthcare coverage on your tax return.

Also see:
Health Insurance Marketplaces
Getting Help Paying for Health Insurance Premiums
Minimum Coverage for the Affordable Care Act
Taxpayer FAQs

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