Important Information about the Affordable Care Act

2014 is the first year of the Individual Mandate that all Americans have health insurance.   This provision is part of the Affordable Healthcare Act passed into law in 2010.

During the preparation of your federal income tax return we will need to see evidence that every member of your household reported on your tax return is covered by health insurance for 2014 and that the insurance met Minimum Essential Requirements of coverage.  This is generally deemed to cover 60% of the cost of your healthcare.

If you purchased your health insurance through the federal or state healthcare exchange, you should receive a Form 1095 A from the exchange by February 29, 2015.  In future years, all providers of insurance will be required to provide those covered with a 1095 A (from the exchange) 1095 B (from the private insurance company) or a 1095 C (from large employers).

However the Affordable Care Act established statutory exemptions from the individual shared responsibility payment when the taxpayer experiences “hardships” preventing them from being able to purchase health insurance coverage.

Some exemptions from healthcare coverage are claimed on the tax return, while some require an application through the exchange.  An exemption obtained through the exchange has a unique Exemption Certificate Number (ECN).  This number is required to report on the new Form 8965 Health Coverage Exemptions.  There is no ECN electronic application; you will need to complete the application and wait to receive the ECN in the mail in approximately 2 to 3 weeks.  You can obtain the application at .   Exemptions can be for as little as one month or as much as the whole year.  Facts and circumstances are considered

Exempt Individuals include:

  • Members of recognized religious sects who are conscientiously opposed to accepting any insurance benefits
  • Health care sharing ministry members
  • Individuals not lawfully present in the U.S. including a person who:
    • Is not a U.S. citizen or U.S. national
    • Is a nonresident alien
    • Is present in the U.S. illegally
  • Incarcerated individuals after the disposition of charges against them (pending charges do not apply)
  • Individuals who cannot afford coverage because the individual’s required contribution exceeds 8% of the individuals household income for the taxable year
  • Individual whose household income is below the minimum threshold for filing a tax return
  • Individual during any month in which he or she is a member of an Indian tribe
  • Individual who does not have minimum essential coverage for a short coverage gap (less than 3 months)
  • Individual with a hardship exemption certificate issued by an Exchange certifying that the individual has suffered a hardship affecting the capability to obtain coverage
    • Becoming Homeless
    • Being evicted in the past six months or facing eviction or foreclosure
    • Receiving a shutoff notice from a utility company
    • Recently experiencing domestic violence
    • Recently experiencing the death of a close family member
    • Recently experiencing a fire, flood or other natural or human caused disaster that results in substantial damage to the individual’s property
    • Filing for bankruptcy within six months
    • Incurring unreimbursed medical expenses in the last 24 months that resulted in substantial debt
    • Experiencing unexpected increased in essential expenses due to caring for an ill, disabled or aging family member
    • Being the person responsible for providing medical support for a child who is determined ineligible for Medicaid or CHIP, but not being able to claim the child as a tax dependent because of a court order
    • As a result of an eligibility appeals decision, being determined eligible to enroll in a QHP, eligible for advance payments of the premium assistance credit or eligible for cost sharing reductions for a period of time during which the individual was not enrolled in a QHP through the state marketplace

The Affordable Healthcare Act has placed many requirements on taxpayers but the requirements do not stop there.  As your tax professional I am required to conduct sufficient due diligence to determine your coverage is sufficient to not warrant the penalty assessed by the Healthcare Law.  Your return will require additional time and computation with more than six new tax forms added to the filing for 2014.  Without question, return preparation time and cost will be increased as well as time to consider all the aspects of how the Affordable Healthcare Act will impact you.