Tax Filing and Health Coverage: What's the Connection?

Tax Filing and Health Coverage: What's the Connection?

March 1, 2016
ACE TA Center
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This is a cross-post from the Black AIDS Institute.

Were you enrolled in a Marketplace health plan last year? If you received a premium tax credit when you signed up for coverage, you will need to file a 2015 federal tax return to make sure you got the right amount of financial assistance. If you didn't get a tax credit, you may still be eligible, but you will need to file taxes to find out.

Did you have another form of coverage, such a Medicaid or employer coverage? Or no coverage at all? Use this web-based tool to help you figure out what you need to do when filing taxes, and (if you didn't have coverage) to find out if you qualify for an exemption from the fee.

How the Tax Credit Works

Premium tax credits help lower the cost of health coverage purchased through the Health Insurance Marketplace (e.g., HealthCare.gov) for people with incomes that qualify. The tax credit can work in two ways:

  • Get it now option: Get the credit each month you have Marketplace coverage. This is called an advance premium tax credit. The Marketplace sends the money directly to your health insurance company, and you pay a lower monthly premium.
  • Get it later option: You pay the total premium every month without a discount, but you get a refund on your taxes after the calendar year is over.

Get It Now Option

If you chose the "get it now" option when you enrolled in 2015 health coverage, you are required to file a federal tax return.

The Marketplace uses your tax information to make sure that you got the correct amount of financial help based on your household size and income. This is called reconciliation. Your actual premium tax credit may differ from the advance payment if you household size or income changed after you enrolled in your 2015 plan. You could either get an additional credit, or need to repay some of your initial credit.

Very important: If you got an advance premium tax credit in 2015 but do not file and reconcile tax credits, you will not be able to get premium tax credits next year!

Get It Later Option

If you chose the "get it later" option, you may still be eligible for a tax credit for 2015 coverage. File your federal tax return to find out!

What You Need to Know Before You File Your Taxes

If you had a Marketplace plan in 2015, you will fill out IRS Form 8962 - Premium Tax Credit when you file your taxes. Use this form to (1) reconcile your advance premium tax credits, or (2) find out if you qualify for a tax credit.

Look for IRS Form 1095-A Health Insurance Marketplace Statement - in the mail from the Marketplace. This form provides information about your Marketplace coverage, including any advance premium tax credits you may have received. Use the information on this form to fill out IRS Form 8962.

You May be Eligible For Free Help Filing Your Taxes

If your income is below $54,000:

  • You may be able to get free help with filling out your taxes through the Volunteer Income Tax Assistance (VITA) program.

If your income is below $62,000:

  • The IRS provides free tax filing software.

Clients of the Ryan White HIV/AIDS Program (RWHAP) can also talk to their case manager to find out if tax preparation services are available through their organization or another local provider.

By the ACE TA Center. The goal of the HRSA-supported ACE TA Center is to help RWHAP recipients and subrecipients enroll diverse clients, especially people of color, in health insurance.