Time is running out! With the end of 2017 Health Insurance Marketplace open enrollment period approaching, now is the time to make sure you’re complying with the Affordable Care Act (ACA) to avoid getting a tax penalty when you file your 2017 federal income taxes in 2018.
You have until January 31, 2017 to enroll in 2017 health insurance in the Health Insurance Marketplace. Otherwise you have to wait until the next open enrollment period unless you have a qualifying life event, such as getting married or having a baby.
But not to worry, TurboTax is here to help guide you through the process. Check out our Open Enrollment checklist to make sure you are ACA-covered:
Do I need coverage? The Affordable Care Act requires most Americans to maintain health insurance. The majority of Americans already have employer provided, government, or private insurance. You must report your health insurance status on your tax return. If you are uninsured for longer than two months consecutively, you may face a penalty come tax time unless you qualify for an exemption. The IRS has a free online tool to determine if you’re eligible for an exemption.
I am currently enrolled in a health insurance plan. Does my current plan comply with the ACA? If you already have a plan from the Health Insurance Marketplace, your state Marketplace or you’re enrolled in Medicare, Medicaid, the Children’s Health Insurance Program, or the VA, TRICARE or any other qualified coverage, your health insurance complies with the health law. Most individual and work-based plans also comply, but be sure to check with your carrier or employer!
What is a subsidy, and how do I know if I qualify? A subsidy is a form of financial assistance provided by the government. For health insurance, this usually comes in the form of an Advanced Premium Tax Credit. If you’re uninsured or buy coverage on your own, visit Healthcare.gov or your state’s Marketplace to determine if you qualify for Marketplace health insurance and the subsidy. When you purchase health insurance in the Health Insurance Marketplace you may be eligible for an advanced premium tax credit and cost-sharing assistance, depending on your annual household income and size to help you pay for health insurance.
The TurboTax subsidy calculator will let you know if you could qualify for a tax credit from the government, and how much.
Should I switch plans? If you already have a Marketplace plan, you have until January 31st to purchase different coverage, even if you were automatically re-enrolled in your current plan. Check to see if the plan is still right for you. The costs and benefits may have changed including provider network and prescription plans. Remember to cancel your old policy to avoid being billed twice!
Did I report household changes? If you already have a Marketplace plan, make sure to update information about your income and family circumstances, such as the birth of a child, divorce or marriage throughout the year. If your income decreased, you may be entitled to a larger tax credit if you didn’t get your full subsidy. Conversely, if your income increased, you may be getting more financial assistance than you’re entitled to and may need to re-pay the money when you file your income taxes.
What’s the penalty for choosing to go without insurance?
The tax penalty is calculated as a percentage of your household income or a flat rate per person. You will have to pay whichever is higher. For 2016, the annual one-time tax penalty is $695 per adult, or 2.5% percent of your annual household income. If you do not have health insurance for 2017, that penalty will remain at $695 per adult or 2.5% of your annual household income adjusted for inflation. For uninsured children in your family, the penalty is $347.50 per child. The tax penalty will be assessed on your 2017 taxes when filed in 2018.
Don’t forget you may qualify for one of over 30 exemptions from the penalty for not having health insurance.
Don’t worry about reporting your health insurance status. TurboTax makes it as simple as checking a box for the majority of taxpayers. If you purchased in the Marketplace you will receive a 1095-A, which is as simple as entering a W-2 in TurboTax.