(Newswire.net — February 18, 2016) — Do you have health insurance? Under Obamacare, you’ll need to report health insurance enrollment on your taxes and failure to enroll in a qualifying health plan can cost you when your taxes come due. Both of these factors may come as news since Obamacare requirements are relatively newly enforced. If you’re still unsure about insurance expectations and accessibility, here’s how the healthcare marketplace, HIPAA, and tax penalties may impact you.
All Enrolled
If you’ve been enrolled in health insurance all year through your company or school, or you’ve purchased health insurance through the marketplace, reporting it on your taxes is a simple process. If you’re independently covered, you’ll simply check a box on your taxes – it will appear right on line 11 of your 1040EZ or at line 38 of your 1040A. For those covered by the Healthcare Marketplace, you’ll receive a form in the mail attesting to your coverage – you’ll use this form to report your coverage.
In some cases, those covered through the Marketplace qualify for tax credits that can reduce the cost of that coverage. This may allow you to get better coverage than you would otherwise be able to afford. Make sure your reported income matches what you predicted when buying coverage or else you may need to pay back some of your credit.
Carrying Career Coverage
Many people get their health coverage from their place of employment, but if you lose your job in the course of the year, don’t worry – you’re protected. This is one of the great benefits of HIPAA, though one of the less recognized ones. HIPAA’s portability component ensures that you can keep continuous coverage if you change jobs. People often think they’ll be left at sea if they lose their job, but you do have options available.
The Marketplace further protects you if you lose employment-based coverage. Obamacare has a category for life changes that can qualify you for new insurance coverage, with gaining or losing eligibility through your job permitting you to qualify for the special enrollment period. Other qualifying factors include marriage or divorce, moving, and having or adopting a child.
Potential Penalties
If you don’t have health insurance, you’ll find yourself facing unpleasant penalties on your taxes. Though there are a few reasons you might be exempt, it’s better to assume you’re required to have coverage unless notified otherwise. You can also be penalized if you purchase insurance independently that doesn’t meet the minimum coverage requirements.
Tax penalties are calculated in two different ways and unfortunately you’ll be expected to pay whichever is higher. First, your penalty can be calculated based on a percentage of your income – 2.5% of your household income. For those meeting the median household income of $51,939 as of the 2014 census, that adds up to just shy of $1,300. The alternative calculation is to pay the equivalent of national average Bronze-level coverage for everyone in your home. If you’re going to pay a tax penalty equal to Bronze-level coverage at the very least, you might as well actually have that coverage.
Meeting Your Tax Obligations
Now that healthcare has become a national obligation, expect to be mindful of your coverage at all times. There are plenty of ways to access coverage, and with tax benefits reasonable, coverage should be affordable to all citizens – whether through Medicaid and Medicare, through the Marketplace, or independently purchased or provided through employment. Buy in on these benefits – the tax penalties mean you’ll be paying for them regardless.