Affordable Care Act: Top 5 Questions Answered

The open enrollment deadline is coming to a close for uninsured Americans to purchase health insurance under the Affordable Care Act (ACA) on March 31.

Anyone that is required to have health insurance but doesn’t purchase health insurance by that date could be subject to a tax penalty when they file their 2014 taxes in 2015.

With just a few weeks left,  we thought it would be helpful for you to see the top questions we’re seeing as they relate to the Affordable Care Act and how people are impacted.

TurboTax Health has compiled the top 5 questions along with answers to the questions below:

1.  Do I qualify for a subsidy?

If you purchase your health insurance through the online Health Insurance Marketplace, you may be eligible for a government subsidy in the form of a tax credit.

However, unlike most tax credits, you will not have to wait to receive the tax credit or subsidy – it can be applied to your insurance premium in 2014 when your coverage begins. Check out this calculator to determine if you’re eligible for a subsidy.

2.  How does the Affordable Care Act impact my family?

All uninsured family members may be required to be enrolled in a health plan by the March deadline.

If you or your family members are not insured, or you want to pay for your own insurance, you may be able to purchase health insurance through either a state or federal Marketplace, depending on where you live.

A family of four may qualify for a subsidy if household income is between $23,550 and $94,200, which is between one and four times the poverty level.

3.  What next steps do I need to take to purchase insurance?

If you’re uninsured, you can shop for health insurance in the online Health Insurance Marketplace, which helps you compare your health insurance coverage options and costs.

Each state may have an online marketplace, if not you can go to or TurboTax Health.

TurboTax Health can connect you to eHealth so you can shop for health insurance.  You can also find out if you’re eligible for a subsidy, an estimate of the subsidy, your out of pocket costs, and your tax penalty if you don’t purchase health insurance.

4.  Can I stay on my current health plan?

If you already have health insurance, you may be able to stay on your existing health insurance if the insurance meets minimum coverage standards under the new health care law.

If you’re currently enrolled in a health care plan through your employer, Medicare or Medicaid, or if you are on your parents’ insurance plan and your plan meets minimum essential health insurance standards under the Affordable Care Act, then you may not see much change.

If your health insurance does not meet minimum standards under the new law a recent policy change may also allow you to keep your current coverage through 2016 as long as your state commissioner allows your insurer to continue to offer out-of-date plans.

5.  How does the ACA impact my taxes?

If you don’t purchase insurance by the March 31st deadline, you could receive a tax penalty on your 2014 tax return (the one you file in 2015).

The tax penalty will be prorated based on the number of months you are uninsured and will increase each year; however, there’s no penalty for a gap in coverage less than three months.

Our calculator can help estimate how much your penalty will be for tax year 2014 if you don’t purchase health insurance.

These are just a few of the top questions we’ve seen around the Affordable Care Act, but answers to all your questions, including a personalized guide to healthcare reform, are available at TurboTax Health.


Lisa Lewis is a CPA and the TurboTax Blog Editor. Lisa has 15 years of experience in tax preparation. Her success is attributed to being able to interpret tax laws and help clients better understand them. Lisa also has been a TurboTax product user for many years and understands how the software program works. In addition to extensive tax experience, Lisa also has a very well-rounded professional background. She has held positions as a public auditor, controller, and operations manager. Prior to becoming the TurboTax Blog Editor, she was a Technical Writer for the TurboTax Consumer Group and worked on a project to write new FAQs to help customers better understand tax laws. She could also be seen helping TurboTax customers with tax questions during Lifeline. For Lisa, getting timely and accurate information out to customers to help them is paramount.

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  1. With the White House recently proclaiming change number thirty-something in the Unaffordable Uncaring Act, the individual mandate and associated penalty are now comatose. Here is some valuable info from another TurboTax blog question:

    How do I qualify for an exemption from the fee for not having health coverage?
    Most people must have health coverage or pay a fee (the “individual shared responsibility payment”). You can get an exemption in certain cases.
    The individual shared responsibility payment
    If you can afford health insurance but choose not to buy it, you must pay a fee known as the individual shared responsibility payment.
    The fee in 2014 is 1% of your yearly income or $95 per person for the year, whichever is higher. The fee increases every year. In 2016 it’s 2.5% of income or $695 per person, whichever is higher.
    If you’re paying under the $95 per person method, in 2014 the payment for uninsured children is $47.50 per child. The most a family would have to pay under this method in 2014 is $285.
    You make the payment when you file your 2014 taxes, which are due in April 2015.
    Exemptions from the payment
    Under certain circumstances, you won’t have to make the individual responsibility payment. This is called an “exemption.”
    You may qualify for an exemption if:
    • You’re uninsured for less than 3 months of the year
    • The lowest-priced coverage available to you would cost more than 8% of your household income
    • You don’t have to file a tax return because your income is too low (Learn about the filing limit.)
    • You’re a member of a federally recognized tribe or eligible for services through an Indian Health Services provider
    • You’re a member of a recognized health care sharing ministry
    • You’re a member of a recognized religious sect with religious objections to insurance, including Social Security and Medicare
    • You’re incarcerated, and not awaiting the disposition of charges against you
    • You’re not lawfully present in the U.S.
    Hardship exemptions
    If you have any of the circumstances below that affect your ability to purchase health insurance coverage, you may qualify for a “hardship” exemption:
    1. You were homeless.
    2. You were evicted in the past 6 months or were facing eviction or foreclosure.
    3. You received a shut-off notice from a utility company.
    4. You recently experienced domestic violence.
    5. You recently experienced the death of a close family member.
    6. You experienced a fire, flood, or other natural or human-caused disaster that caused substantial damage to your property.
    7. You filed for bankruptcy in the last 6 months.
    8. You had medical expenses you couldn’t pay in the last 24 months.
    9. You experienced unexpected increases in necessary expenses due to caring for an ill, disabled, or aging family member.
    10. You expect to claim a child as a tax dependent who’s been denied coverage in Medicaid and CHIP, and another person is required by court order to give medical support to the child. In this case, you do not have the pay the penalty for the child.
    11. As a result of an eligibility appeals decision, you’re eligible for enrollment in a qualified health plan (QHP) through the Marketplace, lower costs on your monthly premiums, or cost-sharing reductions for a time period when you weren’t enrolled in a QHP through the Marketplace.
    12. You were determined ineligible for Medicaid because your state didn’t expand eligibility for Medicaid under the Affordable Care Act.
    13. Your individual insurance plan was cancelled and you believe other Marketplace plans are unaffordable.
    14. You experienced another hardship in obtaining health insurance.
    How to apply for an exemption
    If you are applying for an exemption based on: coverage being unaffordable; membership in a health care sharing ministry; membership in a federally-recognized tribe; or being incarcerated:
    You have two options–
    • You can claim these exemptions when you fill out your 2014 federal tax return, which is due in April 2015
    • You can apply for the exemptions using the appropriate form:
    o Form to apply for exemption based on coverage being unaffordable (if you live in a state using
    o Form to apply for exemption based on coverage being unaffordable (if you live in a state using its own health exchange)
    o Form to apply for exemption based on membership in a health care sharing ministry
    o Form to apply for exemption for American Indians and Alaska Natives and others who are eligible for services from an Indian health care provider
    o Form to apply for exemption based on being incarcerated
    Note: If you get an exemption because coverage is unaffordable based on your expected income, you may also qualify to buy catastrophic coverage through the Marketplace. This may be more affordable than your other options.
    If you’re applying for an exemption based on: membership in a recognized religious sect whose members object to insurance; eligibility for services through an Indian health care provider; or one of the hardships described above:
    • You fill out an exemption application using the appropriate form:
    o Form to apply for exemption based on membership in a recognized religious sect whose members object to insurance
    o Form to apply for exemption based eligibility for services through an Indian health care provider
    o Form to apply for exemption based on a hardship
    If your income will be low enough that you will not be required to file taxes:
    • You don’t need to apply for an exemption. This is true even if you file a return in order to get a refund of money withheld from your paycheck. You won’t have to make the shared responsibility payment.
    If you have a gap in coverage of less than 3 months, or you are not lawfully present in the U.S.:
    • You don’t need to apply for an exemption. This will be handled when you file your taxes.

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