What does the ACA mean for your individual tax return?

With much media attention, the individual healthcare mandate under the Affordable Care Act went into effect at the start of 2014.  So what does it mean for you? Checking the box.  If you look at a new 2014 Form 1040, you'll see a new box to check on Line 61 to verify that you have health coverage.  Over 75% of taxpayers will be checking this box on their returns to state that they have minimum essential coverage. 

But those who still do not have minimum coverage cannot check the box.  Instead they have two options: (1) they can claim an exemption on Form 8965, or (2) they can pay a fee, called the shared responsibility payment, which they calculate using a Shared Responsibility Payment Worksheet.  The payment is generally either a percentage of your income or a flat dollar amount, whichever is greater.  Individuals who are not required to file a tax return are exempt from the shared responsibility payment. What is minimum essential coverage? 

The health care coverage most people have is minimum essential coverage. This coverage includes (1) health coverage provided by your employer; (2) health coverage from the Health Insurance Marketplace; (3) Medicare, most Medicaid, and most coverage provided to veterans and active duty military; and (4) certain types of coverage you buy from an insurance company. Premium tax credit.  Certain individuals who obtain insurance through the Health Insurance Marketplace may be able to claim the premium tax credit on Line 69 of their return.  You can use Form 8962 to see if you, your spouse, or a dependent qualifies for the credit. Those who got an advance premium tax credit to help them pay for coverage must file a tax return (even if they otherwise are not required to file) and Form 8962 to make sure they received the right amount of assistance based on their actual incomes. Employers. 

Some small employers with less than 25 full-time employees may qualify for employer tax credits for providing employee health insurance.  But the Employer Mandate under the ACA did not go into effect until the start of 2015 for companies with 100 or more full-time employees, and it will not apply until 2016 for companies with 50 to 99 full-time employees.