The Affordable Care Act and Taxes: What You Need To Know

If you are one of millions of Americans who bought health insurance through a government exchange, filing your taxes could be slightly more complicated when tax season occurs. Different rules also apply depending on which U.S. state you live in. HealthMarkets can help explain the basics of the Affordable Care Act and taxes.

IRS Form 1095-A

If you bought health insurance through a state or federal insurance exchange, you should receive IRS Form 1095-A, the Health Insurance Marketplace Statement. It lists which members of your household were covered, for how long, the premium costs, and any advance payment received as a premium tax credit (also known as a subsidy). Make sure the information on the form is accurate and if you find errors, call the Marketplace Call Center at 1-800-318-2596 to find out how to get a corrected form.

Paying Back Excessive Premium Subsidies

Many of the millions of people who buy health insurance through the exchanges receive subsidies, which reduces their monthly premiums. But those subsidies are based on the previous year’s income, so if your income changes you may have to pay back some of that money.

If you discover that you’ve received too much in premium subsidies, you may have to pay that money back. However, there are limits on that payback amount for some families, depending on the size of the household and the income. It is worth noting, the IRS suspended the requirement to report and repay excessive premium subsidies for 2020 tax returns.

How Does the Affordable Care Act Affect My Taxes?

Because the Affordable Care Act (ACA) individual mandate was repealed at the federal level, you will not be penalized for not carrying health insurance after 2019. However, depending on your state or region of residence, you may still have to pay a fee if you do not have qualifying health coverage.

As of October 2021, residents of Washington D.C., as well as California, Massachusetts, New Jersey, and Rhode Island, are required to have qualifying ACA health coverage or an exemption from it. If they have neither, a penalty will be assessed as a part of their state and D.C. taxes. Vermont residents won’t face a penalty; however, they must report whether they have health coverage when filing state taxes.

While we can’t include all the details you may need to know about the Affordable Care Act and taxes, hopefully the information above has provided you with a better understanding of how the process works. For further information, please contact the IRS or your state tax agency.

Find Affordable Care Act Health Coverage

HealthMarkets can help you find Affordable Care Act health insurance plans, at no cost to you. We can help you review your options online right now, or you can call us 24/7 at (800) 827-9990 to speak with a licensed insurance agent.