Facts about your taxes & the Affordable Care Act

The Patient Protection and Affordable Care Act includes health insurance and tax law changes. Several measures of the Affordable Care Act, also known as Obamacare, have been implemented, but the most significant changes take effect in 2014 and 2015, including:

  • Individual mandate

    Requires most Americans to have qualified health insurance as of Jan. 1, 2014. Coverage can be obtained through employer-sponsored plans, government programs such as Medicare or Medicaid, private plans or through the new federal or state marketplaces, also called health insurance exchanges.
  • Premium tax credits and financial assistance

    Available to qualifying individuals who don't have access to employer-provided coverage and purchase health insurance through a marketplace. Eligibility and amounts are based on the cost of marketplace premiums and your household size and income. The credit will be paid directly to the health insurance company to help cover monthly payments. If you elect to receive a lesser credit or no credit at all, you can claim the refundable credit on your 2014 tax return (due April 15, 2015).
  • Tax penalty for uninsured

    If you don't have health insurance for a total of 3 or more months in 2014, you may be subject to a penalty payable on your tax return due April 15, 2015. The amount is based on the number of uninsured individuals in your household and household income.
  • Small business mandate

    Starting in 2015, businesses with more than 50 FTE employees in 2014 (or a combination of full-time and part-time employees equivalent to 50 FTE employees) must either offer a minimum level of health care coverage to employees and their dependents, or pay the IRS Employer Shared Responsibility payments for any FTEs who purchase coverage through a marketplace and receive the premium tax credit.

Changes impacting your 2014 tax return

TaxACT 2014 will navigate all the ACA changes plus hundreds of deductions and credits for you but here's a summary of how the ACA impacts federal tax returns due April 15, 2015:

As of January 1, 2014, most Americans are required to have minimum essential health insurance. For most taxpayers, this means little or no changes to your taxes.

  • If you had employer-provided insurance for most of 2014, or you purchased coverage through a private exchange or directly from an insurance company, the ACA's insurance mandate won't impact your taxes. (Note: You may receive IRS Form 1095-B and/or 1095-C from your employer or insurance company in Jan. 2015, but you don't need to report that info on this year's tax return.)
  • If you purchased insurance for 2014 from a marketplace, you'll receive IRS Form 1095-A in Jan. 2015. Simply enter the form info when prompted and TaxACT will report the proper information on your return.

If you received the advanced premium credit in 2014, that information will be on your Form 1095-A. You may receive a bigger tax credit or have to pay back some or all of the credit if your actual income is more or less than the amount you estimated at the time you purchased coverage from your marketplace. Enter your Form 1095-A information into TaxACT, and we'll do the calculations and complete the necessary tax form.

If you did not have insurance for 3 or more months in 2014, you may be subject to a penalty (also known as an individual shared responsibility payment) that you must pay when filing your taxes. The penalty is 1% of your 2014 income or $95 per adult – whichever is higher – and $47.50 per uninsured dependent under the age of 18, up to $285 total per family.

IMPORTANT! If you were uninsured and plan to claim an exemption in order to avoid the penalty, go to www.healthcare.gov/exemptions to see if you need to file an exemption application. Be sure to mail your exemption application as soon as possible because processing can take several weeks. If your application is accepted, you'll be issued an exemption certificate number (ECN). Since you must report your ECN on your tax return, don't wait to apply - doing so could delay processing of your tax return and your tax refund!

What to do now

Find out how much the ACA and other tax law changes will impact you – calculate your 2014 taxes now. Start your TaxACT Free Federal Edition return risk-free now, then finish and e- file your federal return free after TaxACT is updated with final IRS forms in early Jan. 2015.
Get TaxACT's free year-by-year guide (updated for 2014 tax returns) to the ACA's impact on your taxes at www.healthcareact.com
Did you purchase coverage in a marketplace for 2014?

  • If your income or household size has changed, notify the marketplace to verify your eligibility for the premium tax credit (and thus avoiding a surprise at tax time).
  • Review your plan to make sure it still meets your needs for 2015. If you want to change your coverage, you must do so during open enrollment – Nov. 15, 2014 to Feb. 15, 2015 – or your plan will be automatically renewed. (Renewal processes and rules vary in state marketplaces.)
If you don't have health insurance, visit www.healthcare.gov to learn about your 2015 coverage options and to apply. Open enrollment is Nov. 15, 2014 to Feb. 15, 2015. Remember, you may qualify for the advance premium tax credit. Estimate your eligibility with TaxACT's Healthcare Tax Credit Calculator.

Key dates

March 23, 2010

The Patient Protection & Affordable Care Act signed into law. It includes measures that will impact individuals, families & small businesses.

Jan. 1, 2014

Most individuals required to have basic health insurance coverage or pay tax penalty. Tax credits & cost-sharing subsidies to help pay for insurance premiums & other health care costs now available.

Nov. 15, 2014

Open enrollment in marketplaces begins. Apply for, keep or change your coverage.

Dec. 15, 2014

Enrollment due date if you want new or changed coverage to begin on Jan. 1, 2015.

Dec. 31, 2014

Coverage ends for 2014 plans.

Jan. 1, 2015

Small business with more than 50 full-time equivalent employees required to offer health insurance or pay tax penalty.

Feb. 15, 2015

Last day to apply for 2015 coverage during open enrollment.

  • March 23, 2010 - The Patient Protection & Affordable Care Act signed into law. It includes measures that will impact individuals, families & small businesses.
  • Jan. 1, 2014 - Most individuals required to have basic health insurance coverage or pay tax penalty. Tax credits & cost-sharing subsidies to help pay for insurance premiums & other health care costs now available.
  • Nov. 15, 2014 - Open enrollment in marketplaces begins. Apply for, keep or change your coverage.
  • Dec. 15, 2014 - Enrollment due date if you want new or changed coverage to begin on Jan. 1, 2015.
  • Dec. 31, 2014 - Coverage ends for 2014 plans.
  • Jan. 1, 2015 - Small business with more than 50 full-time equivalent employees required to offer health insurance or pay tax penalty.
  • Feb. 15, 2015 - Last day to apply for 2015 coverage during open enrollment.