How Does Obamacare, also known as the Affordable Care Act (ACA) impact your taxes? Why does healthcare have anything to do with taxes? We give you the scoop in this short and sweet article.
From a tax perspective, the headline for Obamacare is that everyone must have health insurance, or pay a fine that is enforced when they file their federal tax return. Here are five key things that describe the Affordable Care Act (ACA) in more detail.
1. Fines start in tax year 2014, on tax returns that are typically filed in 2015. The fine amount for 2014 is the higher of these two amounts:
- 1% of your yearly household income. Only the amount of income above the tax filing threshold, $10,150 for an individual, is used to calculate the penalty.
- $95 per person for the year ($47.50 per child under 18). The maximum penalty per family using this method is $285.
2. The fines increase significantly over time. If you don’t have coverage in 2015, you’ll pay the higher of these two amounts when you file taxes in 2016:
- $325 per person for the year ($162.50 per child under 18). The maximum penalty per family using this method is $975.
- 2% of your yearly household income. Only the amount of income above the tax filing threshold, $10,300 for an individual, is used to calculate the penalty.
In 2016 it’s 2.5% of income or $695 per person. After that it's adjusted for inflation.
3. There are exceptions. You are exempt from the fine under certain hardship conditions. See a full list of the conditions at HealthCare.gov.
4. You may be eligible for a tax credit for some of the health insurance premiums you paid. Use this calculator to determine if you’re eligible and the amount of the credit.
5. You can get coverage from your employer (if they offer it), directly from a private provider, or via the Marketplace at Healthcare.gov. The deadline for Open Enrollment for 2015 is February 15th.
This article also answers these questions:
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