Tax Preparation Topic – ObamaCarePosted on October 26th, 2016
The purpose of ObamaCare is to provide more affordable and equal health insurance for all Americans by achieving goals such as:
• Making health Insurance cost lower for seniors
• Preventing unhealthy individuals from being denied health insurance
• Encouraging employers to provide healthcare plans for their employees
• Providing assistance to those that cannot afford health insurance on their own
For a better understanding of how ObamaCare works watch the video below by the Kaiser Family Foundation:
Since the passing of the Affordable Care Act everyone is required to have health insurance by employer, by market, or by the government. The penalty for not acquiring health insurance for 2016 has been increased to $695.00 for each adult and $347.50 for each child and the penalty may add up to $2,085.00 for an entire family.
If you were covered for a portion of the year, you will pay 1/12 of the penalty for each full month of no coverage. In order to figure out the total amount you owe at the end of the year to the IRS, because of lack of health insurance, form 8965 is filed along with your tax return. This form also allows those that qualify to claim exemptions in order to avoid the penalty.
If you attained health insurance for the year from Healthcare.gov or your state’s Health Insurance Marketplace, you may need to file a form 8962 in order to figure out if you qualify for the Premium tax Credit or even, if you need to pay back some of the assistance provided to you during the year.
To fill out the above mentioned forms (8962 and 8965) your tax preparer may ask you for a 1094 or 1095. If you google these forms you will find the empty templates, but don’t panic. You don’t need to fill out these forms. These forms are sent to you by your insurance provider.
In 2017 the penalties for not having health insurance are not expected to be raised significantly, but in order to avoid a penalty you must get health insurance by January of 2017. The 2017 open enrollment is open from November 1, 2016 to January 31, 2017 for individuals who want to get cost assistance by purchasing insurance from the individual market. If you miss the open enrollment deadline, the options you are left with are Short Term Health Insurance, employer-based coverage, Medicaid, Medicare, and CHIP.
Although, signing up for health insurance through ObamaCare during open enrollment may no longer be the best option for many Americans. It was recently announced that the average mid-level plan provided will be going up in cost by 22 percent. This percentage may vary depending on state. For example, customers in Phoenix may be paying more than twice as much for their premium in 2017 than in 2016. For individuals that receive subsidies in order to help with the cost of insurance, this may not be as hard of a hit, but for those that pay for their insurance fully by themselves, and are not able to switch plans, this will be the hardest hit.
Those that do not purchase insurance from the market are not really affected by this increase in rates for now, but rates for all types of health insurance are expected to go up within the next few years.
For more details on the Affordable Care Act visit http://obamacarefacts.com/.