Important Changes in the Affordable Care Act

IMPORTANT CHANGES IN THE AFFORDABLE CARE ACT THAT WILL AFFECT YOUR 2015 TAX RETURN

Beginning in 2014, The Affordable Care Act (ACA) made health insurance mandatory. These new laws brought many changes that can significantly affect your tax return. You are now required to report on your tax return if you were covered by minimal essential health coverage, and if not, possibly have to pay a penalty.

If you went through an Exchange and received a subsidy from the government, you have even more reporting requirements.

Starting in 2015 there are even more changes to the ACA and reporting requirements. There will potentially be 3 tax forms you might receive, the penalty for not having insurance has gone up and there are new requirements for employers.

These are the 3 tax forms you may receive that you must bring your tax preparer to complete your 2015 tax return:

  • Form 1095-A If you received a subsidy from the government for your health insurance, they will issue you a form 1095-A. You must have this form to complete your tax return. Your tax return cannot be completed without it. This form is used to calculate the Premium Tax Credit and to determine exemptions and penalties. If you did not receive this form in the mail, you can sign in to your Covered California account and there should be a copy of it in your inbox.
  • Form 1095-B For your 2014 tax return, you were on the honor system for reporting on your tax return whether or not you were covered by health insurance. Starting this year, you will be issued a form 1095-B or 1095-C that will disclose your health insurance coverage. Form 1095-B is furnished to those individuals who had non-marketplace insurance or more than one source of coverage. This form will also be issued to individuals with government sponsored programs like Medicare, Medicaid and COBRA. This form is issued by the insurance company or employer who used the SHOP, small self-funded groups.
  • Form 1095-CThis form is similar to the 1095-B, but this form is furnished to those who have employer-sponsored health coverage by an Applicable Large employer and is issued by your employer.

 

The Penalty

In addition to these new forms, the penalty for not having health insurance has gone up. Last year was the lesser of $95 per individual or 1% of your household income over the filing threshold. For tax year 2015, the penalty has gone up to the lesser of $325 per individual or 2% of your household income over the filing threshold. The penalty will continue to go up for 2016 as well.

Starting in 2015, employers who are employing a certain amount of employees, generally 50 or more full-time employees, are considered an Applicable Large Employer (ALE). These ALE’s are required to offer affordable health coverage to their full-time employees and their dependents or they will receive penalties.

Please don’t forget to bring these documents to your tax appointment and remember open enrollment begins November 1, 2015 and ends January 31, 2016!