The deadline to enroll in health insurance under the Affordable Care Act is less than three weeks away, and the law could impact your future tax situation.
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If you already have health insurance, you are in compliance with the mandate and don’t need to worry about the deadline. This includes health insurance coverage provided by your current or former employer, Medicare, Medicaid or other government-sponsored health insurance including programs for veterans.
Buying coverage through the federal or a state insurance exchange, you may find that you are eligible for financial assistance including the premium tax credit, which will help lower the out-of-pocket expense of your monthly premium.
Many of the tax provisions included in the president’s signature legislation went into effect on Jan. 1, 2014, so your 2013 income tax return will likely not be affected. But if you are without coverage by the due date of March 31, you could face some fairly expensive tax penalties depending upon your situation.
In a statement, Michael Mahoney, senior vice president of consumer marketing for GoHealthInsurance says that some taxpayers may be exempt from obtaining health insurance. He lists the following qualifying life events that may exempt you from tax penalties:
1. You’re uninsured for less than three months of the year
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2. The lowest-priced coverage available to you would cost more than 8% of your household income
3. You don’t have to file a tax return because your income is too low
4. You’re a member of a federally recognized tribe or eligible for services through an Indian Health Services provider
5. You’re a member of a recognized health care sharing ministry
6. You’re a member of a recognized religious sect with religious objections to insurance, including Social Security and Medicare
7. You’re incarcerated, and not awaiting the disposition of charges against you
8. You’re not lawfully present in the U.S.
There are also ‘hardship exemptions’ which can exclude people from having to buy coverage. The hardship exemptions apply to special circumstances including if you were homeless, evicted, recently experienced domestic violence, filed for bankruptcy in the last six months, deemed ineligible for Medicaid because your state did not expand eligibility for Medicaid, or received a shut-off notice from a utility company.”
You can claim an exemption when you file your 2014 federal tax return, due in April 15, 2015. You can also request forms from the federal or state marketplaces in order to apply for an exemption.
For information on health care tax tips go here