by Syreeta, contributor
Great Blessed Friday…..It’s the Weekend!!
This past year we have been bombarded with terms such as: “Affordable Care Act”, “Obamacare”, “Health Insurance Marketplace”, and “Premium Tax Credit”. So much information has been circulating via emails, passed though your employers, and media sources ‘explaining’ what these terms meant, only seemed to further complicate your understanding!!
So, I will attempt to sum it up…however, if you click Questions and Answers on the Premium Tax Credit, I will link you directly to the IRS page for detailed information. It’s actually very clear and thorough.
There are a few basic tips to keep in mind about the new health care law, as your 2014 tax return will ask if you had insurance coverage or qualified for an exemption. If not, you may owe a shared responsibility payment when you file in 2015.
Starting this past January 2014 the Affordable Care Act (ACA) went into effect. Each individual (you/your family) were required to either have qualifying health insurance coverage throughout this past year, qualify for an exemption from coverage, or make a payment when you file your 2014 federal income tax return in 2015. Qualifying coverage includes:
- coverage provided by your employer
- health insurance you purchase in the Health Insurance Marketplace
- most government-sponsored coverage
- coverage you purchase directly from an insurance company
Many of you already have qualifying health insurance coverage and don’t need to do anything more than maintain that coverage.
However, qualifying coverage does not include coverage that may provide limited benefits, such as coverage only for vision care or dental care, workers’ compensation, or coverage that only covers a specific disease or condition.
You may be exempt from the requirement to maintain qualified coverage if you:
- Have no affordable coverage options because the minimum amount you must pay for the annual premiums is more than eight percent of your household income
- Have a gap in coverage for less than three consecutive months
- Qualify for an exemption for one of several other reasons, including having a hardship that prevents you from obtaining coverage, or belonging to a group explicitly exempt from the requirement. On IRS.gov/ACA, you can find a comprehensive list of the coverage exemptions or at HealthCare.gov/exemptions.
Premium Tax Credit
The premium tax credit is an advanceable, refundable tax credit designed to help eligible individuals and families with low or moderate income afford health insurance purchased through the Health Insurance Marketplace.
If you applied for coverage through the Marketplace, the Marketplace would have estimated the amount of the premium tax credit that you may be able to claim for the tax year (using information you provided about your family composition and projected household income at time of application).
Based upon that estimate, you would have decided if you wanted to have all, some, or none of your estimated credit paid in advance directly to your insurance company to be applied to your monthly premiums. If you chose to have all or some of your credit paid in advance, you will be required to reconcile on your income tax return the amount of advance payments that the government sent on your behalf with the premium tax credit that you may claim based on your actual household income and family size.
If you didn’t opt for advance credit payments, you may claim the credit when you file your tax return for the year, which will either lower the amount of taxes owed on that return or increase your refund.
Are You Eligible For The Premium Tax Credit?
Must meet all of the following requirements:
- Purchased coverage through the Marketplace
- Have household income that falls within a certain range
- Are not able to get affordable coverage through an eligible employer plan that provides minimum value
- Are not eligible for coverage through a government program, like Medicaid, Medicare, CHIP or TRICARE.
- Do not file a Married Filing Separately tax return
- Cannot be claimed as a dependent by another person.
Change in Circumstances
Need to let the Marketplace know of the following change of (life) circumstances, as it may cause adjustments in the amount of advance creditpayments that the government sends to your health insurer.
- Marriage / Divorce
- Birth / Adoption of child
- New / Lost a job
- Moved to new address
- Gained / Lose eligibility for employer or government sponsored health care coverage
- Any other changes that might affect family composition, family size, income or your enrollment.
In most cases, the special enrollment period for Marketplace coverage is open for 60 days from the date of the life event.
Reporting the changes will help you avoid having too much or not enough premium assistance paid to reduce your monthly health insurance premiums. Getting too much premium assistance means you may owe additional money or get a smaller refund when you file your taxes. On the other hand, getting too little could mean missing out on monthly premium assistance that you deserve.
Syreeta has been a business owner since 1999. She understands the trials, tribulations, and successes of owning a business and getting your “personal financial house” in order. I hold a MBA with a Concentration in Business Management, am a Certified Tax Preparer preparing to take the IRS Enrolled Agent competency exam, and a Notary Public. My objective is to provide my clients with the necessary resources to further their personal, business and economic goals, while promoting their entrepreneurial spirit. Contact her at syreeta@syreeta.biz.