The Affordable Care Act introduces a number of national health insurance policy changes.
2014 health care will be affordable for most people living in the U.S. Parts of the act have
been rolling out since 2010. Enrollment in insurance will begin in the fall of 2013
and the individual mandate will take effect in 2014.
The Affordable Care Act introduces an approach to coverage called "shared responsibility."
This means that most Americans will have a responsibility to get health insurance. Even if you
are healthy and don't think you need health insurance, you will need to get coverage
by 2014 or possibly pay a tax penalty.
The Affordable Care Act will begin to impact your taxes in 2014.
Changes will roll out over four years and beyond. If you choose not to get health
insurance, the penalty will increase every year until 2016. After 2016, it
will increase by inflation.
Every state will have access to an "exchange."
An "exchange" is a new competitive marketplace that offers a variety of affordable
health insurance plans. Some states will have their own exchange, while
others will use the federal exchange.
Some people will qualify for subsidized health insurance through a government-sponsored exchange.
Depending on the state you live in, you'll have access to free, in-person assistance from trained navigators,
agents and advisors who will help in the health plan selection and exchange enrollment process.
H&R Block is committed to helping you navigate the health reform landscape and get
the support you need to receive health insurance coverage through
your government-sponsored exchange.
If you qualify for a subsidy, it will probably only cover part of your premium.
The government will pay your subsidy directly to your health insurance company and you'll be responsible for paying the remaining portion of the premium.
The first open enrollment through government-sponsored exchanges begins
in October 2013 and ends in March 2014.
If you qualify, you will be able to choose from plans with different levels of coverage.
Most people in the U.S. will need to have health insurance in 2014 or pay a tax penalty.
Once you turn 18, your health insurance is your own responsibility. However, a parent or guardian can cover most people under 26 and those aged 65 and over should qualify for government health care (such as Medicare). If you have coverage through a qualified plan, you'll meet the requirement and won't
have to pay a penalty.
Your income and number of dependents will influence your subsidy.
A dependent could be your child, your parent, or anyone else for whom you claim a dependency exemption on your tax return. If you don't get health insurance, you may have to pay a tax penalty for each month that you did not have coverage for yourself or members of your household.
If you don't have health insurance for you and your family by 2014, you may pay a tax penalty.
The amount will depend on your annual income and household size, starting at $95 per person or 1% of income (whichever is greater), increasing to $325 or 2% in 2015, and $695 or 2.5% in 2016. After 2016, the dollar amount will be adjusted for inflation each year. Penalties for dependents under 18 will be calculated as a half.
Your household income and the federal poverty level will affect your eligibility for a subsidy.
A family of four with a household income of less than $93,000 per year would probably be eligible for a subsidy, which is the advance of a tax credit. There are also cost-sharing subsidies (assistance with deductibles and co-pays) available. A family of four with income less than $58,000 could be eligible for cost-sharing subsidies. Your eligibility for these types of assistance will be determined by your income and family size, which can be verified by your tax return.
Once you take a subsidy, you'll be responsible for keeping the exchange up-to-date with life changes.
Examples of life changes are getting married, having children, changes in income, etc. You will also be required to file a tax return to ensure that the subsidy you received is correct in relation to your income that year.
The easiest way to verify your income and household size for the exchange is to file your 2012 tax return.
You can also apply for income verification through an exchange. Visit H&R Block and we'll tell you if you are eligible for a subsidy and answer any other questions you may have about the Affordable Care Act.
If your employer provides insurance coverage for you and your family, your
W-2 may display the value of your health insurance plan.
This feature will be for information purposes only and does not mean that you will be
taxed on the cost of employer-sponsored health insurance.
Even if the Affordable Care Act doesn't directly affect you, you may face a Medicare tax increase.
Starting in 2013, joint filers will pay an additional 0.9% Medicare tax on earnings over $250,000. Individuals will pay an additional 0.9% Medicare tax on earnings above the $200,000 threshold. (This includes people who are self-employed.) Also, interest, dividends, capital gains, rent income and royalty income will potentially be subject to a new 3.8% Medicare contribution tax. The tax applies to individuals with adjusted gross income over $200,000 ($250,000 for joint filers).
Medical expense deductions are limited to expenses over 10% of your Adjusted Gross Income (up from 7.5%).
Starting in 2013, most taxpayers must subtract 10% (instead of 7.5%) of their adjusted gross income in determining their itemized deduction for medical expenses. Those who are at least 65 may continue to use the 7.5% threshold through 2016. For married couples, only one spouse must be at least age 65 to continue to use the 7.5% threshold amount.
Citizens and lawful residents of the U.S. will be required to have some form of health insurance
for themselves and their dependents by 2014.
Government-sponsored exchanges will offer an affordable health care option. If you don't get coverage through an exchange or other source, you may have to pay a tax penalty.
"Minimum essential health insurance" is defined as insurance that provides basic health care benefits.
Government-sponsored programs (like Medicaid and Medicare), employer-sponsored health plans, private health insurance plans and government-sponsored exchange insurance plans all meet the necessary criteria and are acceptable coverage according to the Affordable Care Act.