Tax Implications of the Affordable Care Act

The tax implications of the Affordable Care Act continue to evolve. Below are some descriptions, considerations, and requirements you might consider when organizing your tax documents.

If you are enrolled in a health plan through work, Medicaid, Medicare, or purchased a plan outside the Marketplace

  • you may receive a 1095-B or 1095-C, please provide it with your other tax documents.
  • certain private or work provided plans may not meet “minimum essential coverage.” We will ask that you indicate that your plan meets “minimum essential coverage.” Medicare and Medicaid plans do, as do most employer and private plans.To verify this, please review your policy.

If you purchased health insurance through the marketplace:

  • You should receive a 1095-A from the Marketplace. Bring this form with your other tax documents.

If you don’t have health insurance:

Under the ACA, if you do not have health insurance, you may face a penalty of up to $95 per adult or 1% of your total income, whichever is greater. There are a number of exemptions from paying this penalty that you may qualify for, including

  • inability to afford insurance, if the lowest priced plan is more than 8% of your income.
  • you are facing medical expenses over the last two years that result in substantial debt.
  • you had an individual insurance plan that was cancelled, and believe other marketplace plans are unaffordable.
  • you received a shut off notice from a utility company.

Some of these exemptions must be applied for through the marketplace. If you apply and receive an exemption, please bring your exemption certificate number with your other tax documents. Other exemptions are applied for through your tax return. If you would like to apply for an exemption, please bring related documentation.

If your health care coverage changed during the year (for example, part of the year you had employer provided health insurance, and part of the year you had Marketplace insurance or were uninsured), consider all of the descriptions and considerations above that apply to you. In addition, let us know the specific date on which your coverage changed.

For more information, visit the IRS web page on the Premium Tax Credit.