With the roll-out of the Affordable Care Act (ACA), many individuals are wondering how the new law will impact their taxes for 2015. A bill as large as the ACA tends to raise a lot of questions, and there has been a lot of information released in the media that has generated confusion for consumers who are left wondering what their next steps should be.
While the ACA is probably a bit to lengthy to read, there are certain tips and pieces of information that you should be made aware of so that you can act in accordance with the law and have an understanding of the impact the law might have on your current tax situation.
The ACA Has Little Impact on Those Already Covered
Most people have some type of insurance coverage through their employer or a government program. These folks only need to maintain the current plan they have, as they are in compliance with the law already. Given that they are insured, these individuals will not likely experience any significant changes in their tax status.
The Uninsured Can Purchase a Plan Through the Marketplace
If you do not have insurance through your employer or through some type of government plan, you can visit the Health Insurance Marketplace and purchase one. You can do this through a website that will take you step-by-step through the process of finding coverage that meets your needs with a reasonable premium. Many states have their own exchanges, but for the ones that do not, there is a federal exchange that you can use to purchase a plan.
One of the perks of purchasing your insurance through the Marketplace is you could be eligible for an advance premium tax credit. This perk will help lower the cost of the monthly premium you pay for coverage, helping you to save money on health care related expenses.
Shared Responsibility Payment
The 2014 tax return will feature questions related to your health insurance coverage. If you did not have any coverage in 2014 or did not qualify for some type of exemption, you may be required to pay what is known as a “shared responsibility payment.” This is a penalty for not meeting the requirements of the health insurance law, and you will be responsible for the payment when you file your taxes in 2015.
Key Information of Note
For individuals who are self-employed, do not forget that you can deduct the cost of your insurance premiums on your tax forms. There are certain limits on how much can be deducted, so be sure to consult with a tax professional if you aren’t sure how much to put down.
If the coverage you have through your employer is a flexible spending arrangement, the cash that you invest into it reduces the amount of taxable income you make. Also, a health savings account that your company contributes to is money that cannot be taxed.
Reimbursements you receive from a health reimbursement arrangement are considered non-taxable income.
Keep these bits of information in mind when filling out your tax return in 2015.