The Affordable Care Act (“ACA”) imposes the requirement that all Americans acquire health insurance that qualifies as “minimum essential coverage” under the Act. Otherwise, taxpayers may have to make a shared responsibility payment to the IRS when they file their tax return in April. The ACA also allows for a tax credit known as the premium tax credit for taxpayers that purchase health coverage through the Health Insurance Marketplace.
Known as the individual shared responsibility provision, it requires a taxpayer, his or her spouse, and their dependents to have health insurance minimum essential coverage for the entire reporting year. Most taxpayers already have qualifying health care coverage, and will simply report this fact on their return by checking a box.
If a taxpayer qualifies for a Marketplace-granted coverage exemption or is claiming a coverage exemption on his or her 1040, this must be reported on the IRS Form 8965. Individuals are allowed a premium tax credit only for health insurance coverage they purchase through the Marketplace personally or for their spouse and dependents. A credit is not allowed for health insurance coverage purchased outside this Marketplace. Individuals who are eligible to enroll in certain employer-sponsored coverage or government health coverage, like Medicare, Medicaid, or TRICARE, are not eligible for the premium tax credit.
To be eligible for the premium tax credit, (i) a taxpayer’s household income must meet certain income requirements as well as other eligibility criteria; and (ii) the taxpayer cannot be claimed as a dependent by another person; (iii) if married at the end of the reporting calendar year, a joint return must be filed to be an applicable taxpayer unless one of the two exceptions for individuals with household income below 100 percent of the federal poverty line applies. One exception is for certain married persons living apart and another for victims of domestic abuse or spousal abandonment. Taxpayers then file the return as if they are unmarried and take the premium tax credit.
If an individual does not have qualifying coverage or an exemption for each month of the year, then the IRS requires that the taxpayer includes a payment with the taxpayer’s return representing the taxpayer’s share of financial responsibility for health coverage. Navigating through these forms and correctly determining eligibility for an exemption or the premium tax credit is tricky and confusing. An experienced and knowledgeable tax expert at the Thorgood Law Firm can clarify and provide more information about eligibility criteria, exceptions and other filing requirements related to the individual shared responsibility provision.
If you have questions about whether you qualify for an exemption from minimum essential health insurance coverage or simply how to make sure that you disclose all necessary and required information about your health insurance coverage to the IRS, call THE TAX EXPERTS AT THE Thorgood Law Firm www.thorgoodlaw.com. For a FREE consultation call 212-490-0704.
