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Affordable Care Act Adds a New Twist to Tax Preparation


Filing your tax return this year comes with a new twist: confirmation of your health insurance.

Under the Affordable Care Act (ACA), taxpayers filing 2014 tax returns must attest that they had health care insurance since January 1, 2014 for themselves and their dependents. You will have to check a box on your Internal Revenue Service Form 1040 return to indicate you had coverage.

If you didn’t have health insurance for one or more months during 2014, you may have to pay an additional tax, called the Individual Shared Responsibility Payment. You may also qualify for an exemption from the penalty for being uninsured.

Some taxpayers who enrolled in coverage through the Health Insurance Marketplace ( may qualify for a premium tax credit and must file a tax return to claim the credit.

“Every year there are more twists and turns of the tax code, and this is a critical one for this year,” says National Society of Accountants (NSA) Executive Vice President John Ams. “It’s important to get it right to avoid penalties.”

Basic Definitions

According to the IRS, qualifying health care coverage includes insurance from your employer, policies you buy in the Health Insurance Marketplace (, most government-sponsored plans and coverage you purchase directly from an insurance company.

Qualifying coverage does not include insurance providing limited benefits, such as coverage only for vision or dental care, workers’ compensation, or insurance covering only a specific disease or condition.

You had until April 30 to sign up through the Marketplace for 2014 and the deadline for 2015 was February 15, 2015.

Filing implications

To verify your insurance coverage, you likely received Form 1095-A if you enrolled in Marketplace insurance.

(If you were one of the 800,000 filers who received a statement earlier this year that contained an incorrect benchmark premium amount, you do not need to file an amended return. If your form was one of those affected, log into your account and download your updated form or call the Marketplace at 800-318-2596.)

If you acquired insurance outside of the Marketplace, you may have received Forms 1095-B (for employer-sponsored insurance plans) or 1095-C (for private insurance).

You don’t have to provide proof of coverage to the IRS when you file, but you should show documents that verify your minimum essential coverage to your tax preparer. This documentation includes insurance cards, explanation of benefits statements from your insurer, W-2 or payroll statements reflecting health insurance deductions, records of advance payments of the premium tax credit and other statements indicating that you, or a member of your family, had health-care coverage. Your employer is not required to provide documentation specific to your health care coverage for the 2014 tax year.   

Payments and penalties

If you and each member of your family lack qualifying health-care coverage and don’t qualify for an exemption, you may need to make an Individual Shared Responsibility Payment when you file your federal return. IRS Publication 5209 - Preparing your 2014 Tax Return- the shared responsibility payment (at, provides information about how to calculate the payment.

Generally, fees for the 2014 tax filings were $95 for each adult or 1 percent of a household income, whichever is greater. The penalty will increase in coming years.


The government expects that many taxpayers who lack insurance when filing this year will qualify for an exemption.

Possible reasons for exemptions: inability to afford health insurance; income low enough to mean you don’t need to file a return; you lived abroad for a certain number of days in 2014; you belong to a health-care-sharing ministry; you’re a Native American; or you had a short coverage gap at the beginning of 2014, among other reasons.

A special hardship exemption applies if you bought insurance through the Marketplace during the initial enrollment period for 2014 but, due to the enrollment process, have a coverage gap at the beginning of 2014.

If you qualify for an exemption, you apply through the Marketplace or claim the exemption on your tax return. You may need information to support the claim, including documentation to support a hardship, income documents, Social Security information and household information.

If the Marketplace grants your exemption, you will receive a notice with a unique Exemption Certificate Number (ECN). You enter your ECN on Part I of Form 8965, which must be filed with your return. If you don’t yet have an ECN but have applied for an exemption through the Marketplace, you enter the word “PENDING” in the place of the ECN on the 8965.

If claiming an exemption on your tax return, you do not need an ECN. See more at, the IRS instruction booklet for Form 8965.

The government also has links to exemption fact sheets at

If you have questions about ACA and filing your return or you need tax help, find a qualified tax preparer in your area on the NSA website at Click on “Find a Professional” or call (800) 966-6679.

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