Healthcare Reform and Taxes

Health Care

Beginning in 2014, you’ll start seeing some changes to your taxes if you purchase your healthcare coverage at a health insurance Exchange. This won’t affect your taxes if you are already covered by your employer, Medicare, or Medicaid.


2014 is the first year the health care reform law requires you to have health insurance coverage. Most individuals who do not have health insurance will owe a penalty, to be collected by the IRS via your tax return. The penalty starts at $95 in 2014 and increases to $325 in 2015 and to $695 per person by 2016.

On the bright side, individuals who purchase insurance through a health insurance Exchange will be eligible for a tax credit claimed on their 2014 taxes. In order to receive the tax credit for purchasing health insurance from an exchange, you must file a 2014 tax return.

People who have insurance provided by their employer may see that information reported on their W-2 in box 12. If your 2012 W-2 includes this information, don’t worry.  This is for reporting purposes only and does not impact your taxes.

Health insurance exchanges and employers will report information about health insurance coverage to the IRS, so you won’t have to worry about it. In 2014, this reporting requirement will help the IRS figure out if you are eligible for the tax credit in 2014.

You can be sure that TurboTax will be up-to-date with all these healthcare law changes. We’ll let you know what you need to do in the future to help you keep more of your hard earned money.

And if you have questions, call us and an experienced TurboTax tax pro will answer your questions and help you get started on your return. Only TurboTax lets you talk to CPAs, enrolled agents and tax attorneys while you prepare your return, free.

Have specific questions about how this impacts you?  Ask them below or get health care reform answers in our TurboTax community.

Comments (14) Leave your comment

  1. I signed up for insurance through Marketplace today and will be given a credit each month towards my premium based on my income Will I have to pay taxes for this credit at the end of the year when I file my taxes

    1. Hi Carolyn,
      When you file your 2015 taxes in 2016 your actual premium tax credit your eligible for will be compared to the advanced premium tax credit you received. If you overestimated your income you may receive a bigger tax credit or refund, if you underestimated your income then you may owe some of the credit back, however you may be eligible for additional tax credits and deductions so you don’t owe any money. It’s always best if you have any changes income or family size to report it to the Marketplace. Here’s more info
      Thank you,
      Lisa Greene-Lewis


    1. Janet my question was kind of the same as yours but I did not see any replies to yours Did you ever find out any information on this as I was curious too I just signed up with insurance today

  3. I am eligible for the tax credit to help pay for my health insurance through the exchange however I have not filed my income taxes in over 5 years. I know, I know. How will that affect the tax credit on healthcare reform I am eligible for?

    1. Hi Alice,
      One of the requirements to be eligible is you will need to file at least your 2012 taxes unless you did not make enough money to be required to file a tax return(At least $10,000, $20,000 if married filing jointly). The Health Insurance Marketplace uses you 2012 tax information to help qualify you for insurance and a tax credit through the exchange. Plus by not filing you could be missing out on tax refunds.
      Thank you,
      Lisa Greene-Lewis

  4. A friend of mine filed already with you guys and she said she was already charged for not having the health insurance. I thought this was not to be charged until 2014 takes are filed. What gives?

    1. Hi Lylene,
      That is not correct. She would not be charged until she filed her 2014 taxes in 2015. You are not charged on your 2013 taxes filed in 2014. All of our tax software is up to date with the current tax laws and 2013 has not been coded to calculate tax penalties related to not having health insurance since the law is not in affect until 2014.
      Thank you,
      Lisa Greene-Lewis

  5. I have two children, but I’ve let my father claim one of them on his tax returns over the years because of how he helps me out financially with them both. Due the the healthcare reform act, will I now have to claim both of them since I have health insurance on them?

  6. Will the healthcare tax credit you receive to lower the insurance premium be taken out of the refund we normally get on our income tax return?

    1. Hi Pam,
      The tax credit or subsidy can either be applied to your monthly premiums to lower the amount you pay per month or you can get the credit on your 2014 taxes filed in 2015, which may increase your tax refund. When you purchase insurance through the Health Insurance Marketplace, you will have a choice of whether you want the tax credit applied to your insurance premium or receive the credit on your tax return.
      Thank you,
      Lisa Greene-Lewis

  7. If I make 58,000/yearly before taxes (not adjusted for deductions); 1 adult, 2 dependents, and opt to stay with my employers insurance (doesn’t meet the affordable plan guidelines) will I be eligible for the tax credit come tax time. My premiums through employers would be 590.00.

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