While the Affordable Care Act (ACA) officially rolled out in January 2014, most people are unaware that health care and taxes are linked together like never before. Many of the tax provisions under the ACA went into effect on January 1, 2014. This means, when you file your 2014 taxes in January 2015, you may notice some changes on your 2014 taxes. To break down those changes, here are five things you need to know about the relationship between your taxes and health care.
1. You’ll have to prove you either have health insurance or are exempt when you file your taxes. When you file your 2014 federal income tax return in 2015, you’ll be required to provide information about your health insurance coverage or an exemption from the requirement. If your employer pays for employer-sponsored group health plans, that amount will now be reported on your 2014 W-2. While employers are required to report it, the amount doesn’t impact your tax liability and your employer’s contribution to the health plan will not change the taxable income amount.
If you qualify for an exemption from purchasing health insurance and the associated tax penalty for not purchasing health insurance, you may have to apply and gain approval for the exemption through the Health Insurance Marketplace depending on the type of exemption you have. This approval process can take a couple weeks, so apply for the exemption as soon as possible so it will be documented and allow you to file your taxes as soon as tax season begins. You’ll receive an exemption certification number that you’ll need when you file your taxes.
2. You may receive new tax forms to verify your health coverage. If you purchase insurance through the Health Insurance Marketplace, you will receive a new form at tax time, Form 1095-A, which will show details of your insurance coverage like the effective date, amount of premium, and the advance premium tax credit or subsidy.
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Contact Steven G. Cosby, MHSA with questions or to request more information and to schedule a healthcare plan evaluation, savings analysis or group plan solution for your company.