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The Affordable Care Act and Your 2014 Taxes

December 11, 2014

The Affordable Care Act, popularly known as Obamacare, requires each member of your family to have qualifying health insurance. If you cannot, then you must get an exemption, or make a shared responsibility payment when you file your tax return for 2014.

If you purchased your insurance from the Marketplace, then you may be eligible for a Premium Tax Credit (PTC). The PTC can be paid in advance to your insurance company or to you when you file your 2014 return next year. If you have received credit payments in advance, then you will need to report changes in circumstances so that the correct amount of credit can be determined.

You can get an exemption if the cost of health insurance is more than 8% of your income. If you cannot meet allowable living expenses such as food, clothing, transportation, personal care, etc., then also you can get an exemption.

If you are not covered and you do not quality for an exemption, then the amount in shared responsibility payment that you are required to make will depend upon your income. The minimum amount that you will need to pay is $95 per adult and $47.50 per child regardless of your income. For large families, the minimum amount is $285.

If you do not comply with Obamacare rules, then you will need to pay the penalty. Penalties are charged every month. If you are not covered and you do not qualify for an exemption, then you will be required to pay one-twelfth of the annual penalty each month until you get covered.

If your income is higher, then you will be paying 1% of your income that is above the threshold for requiring to file a tax return. If your income is very high, then the maximum penalty charged is equal to the annual cost of a bronze-tier healthcare insurance plan in the Marketplace.

Less than three months of delay in getting healthcare coverage is allowed because many people find it difficult to sign up for Obamacare. No penalty is charged for such a gap within a year.

 

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