By law, most Americans who go without health insurance even when they can afford coverage must pay a penalty when they file their federal tax returns.
Most people (about 80% of Americans) already have health insurance either through their employer, private health plans, Medicaid, Medicare, or other government plans.. For individuals who purchase health insurance on their own, the Health Insurance Marketplace may be the best place to start shopping for coverage. Here’s why.
Financial assistance
The Health Insurance Marketplace is the only place that offers consumers tax credits to help pay for monthly premiums as well as subsidies to cover out-of-pocket expenses. The amount of the advance premium tax credit and subsidy depends on income and size of their household. So far, millions of Americans have received financial assistance to make individual and family coverage affordable.
Qualified plan
Policies sold in the Health Insurance Marketplace are considered qualified plans as required by the Affordable Care Act. The law requires plans to offer 10 categories of essential benefits, ranging from outpatient, inpatient and emergency care to coverage for prescription drugs, rehabilitation services, lab tests and more. Plans must also cover at least 60 percent of health care costs. Folks who purchase unqualified plans may be subject to the tax penalty.
Change in status
Credits and subsidies are only available to those who purchase a plan on on Healthcare.gov or their state Marketplace. People who don’t qualify for a tax credit or subsidy now may become eligible in the future if their circumstances change because their income dropped or the size of their family grew — this is called a Qualifying Life Event (QLE). If you experience a QLE, make sure to re-visit the Marketplace and re-enter your information.
If you are shopping for individual health coverage now, remember that Marketplace open enrollment ends on January 31st. Visit TurboTax.com for free tools to understand your options.