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Does The Health Care Reform Still Impact My Taxes?

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Does The Health Care Reform Still Impact My Taxes?

Question-And-Answer

Brian-

Obamacare made it easier for low to moderate income households to get insurance, but it also brought with it a penalty or shared responsibility payment if you didn’t have insurance. The penalty was hefty for taxpayers. Does that penalty still exist and if so, how does it affect you?

Fortunately, the Health Insurance Penalty expired starting in the 2019 tax year (taxes filed in 2020). Taxpayers are no longer mandated to have health insurance for the 2019 tax year (taxes filed in 2020). However, if you’re filing taxes for 2017 or 2018, the mandate and penalties still exist and must be proven on your tax returns.

How Much was the Health Insurance Penalty?

Before 2019, taxpayers paid $695 per person up to $2,085 per family or 2.5% of household income, whichever was greater if they didn’t have insurance. The only taxpayers exempt from the penalty were those who qualified with one of the following:

  • The cheapest marketplace policy took up 8.05% or more of your income
  • You didn’t make enough to file taxes
  • You experienced a financial hardship
  • You’re a member of a tribe recognized by the federal government

This penalty no longer exists.

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The Healthcare Reform Impact on Taxes Today

If the Healthcare Insurance Penalty no longer exists, what’s the healthcare reform impact on taxes today? Is there even an impact?

There may be, it depends.

If you received health insurance from the marketplace and your insurance company received advanced premium tax credit payments, you have to report your health insurance.

The IRS must reconcile the amount of the premium tax credit they sent to your insurance company and the amount owed. With the tax calculations, the IRS determines if you owe any money back because of overpayment.

To report your health insurance, you must provide one of the following:

  • Form 1095-A – A statement from the marketplace which helps you claim your insurance premium credit (if applicable) or to reconcile any payments made in advance.
  • Form 1095-B – A statement from your private insurance company. You typically don’t need this form unless you had marketplace insurance for a part of the year.
  • Form 1095-C – A statement from your employer-sponsored health insurance. You typically don’t need this form unless you had marketplace insurance for a part of the year.
  • Form 8962– If your income qualifies you for a premium tax credit, you’ll need this to claim it (if your insurance company didn’t get an advance payment).

The information you provide determines if you qualify for a 2020 healthcare premium credit. It’s important to be as accurate as possible and make sure you file your income taxes so you can get the tax credit you’re eligible for (if applicable). Even though the health insurance penalty is over the healthcare reform still impacts your taxes.

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