Obamacare and Taxes: How are They Connected?

For most people, the Affordable Care Act (ACA), also known as Obamacare, had no effect on their 2013 federal income tax return.

This was due in part to the fact that many of the tax provisions under the Affordable Care Act went into effect on January 1, 2014, just after the time frame to be included in your 2013 tax return.

Starting in 2014, you may see changes on your 2014 taxes related to the Affordable Care Act and TurboTax Health wants to make sure you’re prepared.

Proving You Have Health Coverage or Are Exempt When Filing Taxes
You’ll be required to provide information about your health insurance coverage or any exemption of the requirement when you file your 2014 federal income tax return in 2015.

The amount employers pay for employer-sponsored group health plans will be required to be reported on the employee’s 2014 W-2.

It’s important to note that while employers are required to report it, the amount doesn’t affect an individual’s tax liability and the employer’s contribution to the health plan will not change the taxable income amount. Your employer will also provide a new form called a Form 1095-B or 1095-C, depending on your employer’s company size.

If you purchase insurance through the Health Insurance Marketplace you will also see a new form, Form 1095-A, which will show details of your insurance coverage like the effective date, amount of premium, and the advance premium tax credit.

Hot Tip: If you qualify for an exemption, in some cases you have to apply and get approval for the exemption through the Health Insurance Marketplace. The approval can take a couple of weeks so don’t wait to file your taxes to apply for the exemption. Apply for the exemption as soon as possible so it will be documented and you can file your taxes as soon as tax season begins. When you file your taxes you will have to provide an exemption certificate number.

Having No Health Insurance Could Result in a Tax Penalty
If you didn’t have health insurance by the March 31, 2014 open enrollment deadline, you could see another change to your taxes in the form of tax penalty.

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

If you didn’t purchase insurance by the open enrollment deadline, our TurboTax calculator can help estimate how much you could owe for tax year 2014.

Reconciling Changes in Projected Income
Another change you could see is you are required to file your taxes to reconcile the subsidy (premium tax credit) received, if you purchased health insurance through one of the health insurance exchanges and received a subsidy to lower the cost of your health insurance.

In this case, you could end up with a bigger tax refund or a lower one or a balance due since your subsidy(premium tax credit) for 2014 was based on your projected household income.

If your 2014 household income was overestimated , you may receive the remainder of the subsidy in the form of a tax credit when you file your taxes.

However, if you earn more than projected, you will receive a tax penalty lowering your tax refund.

Differences in your actual allowable premium tax credit and your advance premium tax credit reflected on your tax return will be subject to caps based on your income level.

As with all tax laws, TurboTax is up-to-date with the latest tax law changes.  If you have more questions about the Affordable Care Act and how it impacts you and your taxes, you can visit TurboTax Health to get answers.

Comments (6) Leave your comment

  1. socialist forced heathcare wont work an will cost hard working familys also with deductibles of thousands of dollars, might as well not have any an pay the fine its cheaper in most cases than the monthly premiums .besides how long do you think the gov will sub your premiums not very long will then have to pay full price and really be broke ,if not already. this is the change we can believe in.

  2. I don’t work, I am disabled to do so. I have filed and will be working on a disability claim.
    I support my bills off my child support. Which is not an earned Income, is my understanding.
    I can’t get medical coverage through the state since my kids have coverage and they are taking in consideration their father’s income for my own. Although, I own my home, he pays me child support to be here close to his kids. I am not sure what to do to get medicaid, as they are discriminating our lifestyle choices. I’m in a heap of medical troubles, have been for almost 3 years now. My kids keep me fighting every day. It’s hard to get further treatment when I can’t afford to pursue the specialist that my clinic tells me to go see. I can barely pay to see the physicians at my clinic.
    So I don’t file taxes as I haven’t had earned income since 2009.

    • Angie,
      When you apply, do not include your children as members of your household. For purposes of the exchange, you household is those people on one tax return, taxpayer, spouse (if filing jointly), and dependents. If your kids are claimed by their father, then they are part of his household, not yours.

      • Are you talking about applying for disability or medical assistance?
        Per medical applications: My children do live here, they say I have to included everyone in the house even if it doesn’t apply to them.
        My boyfriend does live here, but it is my home. I tried to leave my boyfriend completely off it, but they said since the kids have medicaid I have to include my boyfriends’ income. I’m at a loss on what else to do or say, as it is coming down to someone in that dept for medical assistance, is deciding that I should be punished and not get assistance because HE has a job. But I don’t have a job … and I’ve always supported my kids and my house before without anyone else. But since I was hurt, and went downhill physically and mentally too now, I haven’t been able to work and that is why I am asking for the assistance and looking into disability.
        As for disability, it is mentally draining, as all my work years and it don’t seem to count for anything when I get treated like I don’t need my own deserved social security due to not being able to work now. As I can’t afford to get medical documentation as often as they want it, cause it cost money to go to dr and I don’t have it. I am a very tough, independent women and I deal with pain on a daily basis, it’s like second nature to me now. When asked how I deal with it, IF it is so bad, I just deal with it as well as I can. I don’t HAVE a choice to do anything else. I’ve racked up an $4,000 ER bill when I had no choice but to go in for something to help with it. They put me on Steroids to help with it, and those aggrivate many of my problems as well, more then they help.
        Thanks for any advice. I am so tired of trying and fighting and still not getting what I need so I can be here to care for my children.

  3. Just a quick question. I have hezlth insurance though the healthcare. I file my taxes by adding mychildren they get medicad wil this hurt my taxes.

    • Hi Evette,
      If you have health insurance through the exchange and your kids have Medicaid it will not mess up your taxes.
      Thank you,
      Lisa Greene-Lewis

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