Open Enrollment for 2017 health insurance begins today! Most Americans (8 out of 10) already have health insurance either through their employer, private health plans, Medicaid, Medicare, or other government plans. If you don’t already have health insurance, here are five things you need to know about purchasing 2017 health insurance during open enrollment.
Purchase Soon for 2017 Coverage to Take Effect on January 1, 2017
Sure you have from November 1, 2016 to January 31, 2017 to purchase 2017 health insurance, but if you want your coverage to take effect on January 1, 2017, make sure to select your plan by December 15, 2016.
You May Get Assistance to Help You Pay for Health Insurance
You may be worried that health insurance is expensive, but when you purchase in the Health Insurance Marketplace you may be able to get help paying for your 2017 health insurance via a subsidy also known as advanced premium tax credit. The subsidy or advanced premium tax credit is based on your household income and number of people in your family and in many cases enables you to have health insurance at a lower cost than paying the penalty for not having health insurance.
For instance, a family of 4 making 70,000 at 2.5% penalty would pay $2,085.
If they got a bronze plan, it would be about $4,600 a year in premiums. They would qualify for about $2650 in subsidy, which means their cost would be $1950 which is less than the penalty.
Remember to estimate your household income as closely as possible when you go to purchase in the Marketplace since your estimated income is used to figure out how much subsidy you will get to help you pay for your 2017 health insurance. You can use TurboTax free Income Estimator tool to estimate your income.
Self-employed Have Options During Open Enrollment
You may have been busy this year getting your business organized instead of thinking about health insurance, but if you are self-employed you can get health insurance during open enrollment in the Health Insurance Marketplace or your State Marketplace.
Penalties Are Going Up
If you don’t qualify for an exemption, the penalty is 2.5% of your total household adjusted gross income, or $695 per adult ($347.50 per child), whichever is higher (with a maximum of $2,085). For 2017 and beyond, the percentage option will remain at 2.5%, but the flat fee will include a cost-of-living adjustment.
Shopping around during this Open Enrollment period will allow you to look for an affordable plan and could help you avoid paying a tax penalty when you file your 2017 taxes.
You May Qualify for an Exemption
If you don’t have health insurance you may qualify for an exemption from the penalty for not having health insurance. There are over 30 exemptions from the penalty for not having health insurance ranging from hardships like facing foreclosure to exemptions based on affordability.
Based on last year, we expect that nearly 40% of uninsured tax filers will qualify for a penalty exemption on their tax returns for 2016, so it’s definitely worth checking into. Check out the IRS free online tool to determine if you’re eligible for an exemption.
Reporting Your Health Insurance Status is Easy with TurboTax
2017 marks the third year taxpayers will be required to report their health insurance status on their tax returns under the Affordable Care Act, but there’s no reason to worry since it will be as simple as last year. Most people (8 out of 10) will simply check a box in TurboTax to indicate they were covered.
If you purchased a health insurance plan on healthcare.gov (CuidadodeSalud.gov for Spanish speakers) or your state Marketplace, you will receive Form 1095-A, which confirms coverage, premiums and any subsidies you received to help pay for health insurance. In TurboTax, entering 1095-A information is as easy as entering a W-2: just copy the information from your 1095-A into TurboTax, and we make the calculations based on your entries.
People who were insured through their employer, a government program such as Medicaid, or private insurance, will most likely receive a new tax form (1095-B or -C) confirming coverage or offer of coverage. If you receive these forms, simply review the forms for accuracy and keep the 1095-B or -C for your records – that’s it. You don’t need to wait for these forms to file your 2016 taxes. To learn more about 1095 forms, check out our interactive tool.
TurboTax is up to date with the latest tax laws, and we will continue to keep you informed so you have the latest information on how the ACA might affect you and your taxes. If you have more questions about the Affordable Care Act and your taxes, visit the TurboTax Blog for your answers.