Commentary

April 4, 2014

Federal income taxes and the Affordable Care Act

Many tax payers have asked how the new health care law, called the Affordable Care Act, will affect them when filing income tax returns. While the new law should have no affect for most tax payers when filing 2013 taxes, the new law may affect 2014 income tax filings.

The individual shared responsibility provision of the Affordable Care Act (26 United States code section 5000A) went into effect on Jan. 1, 2014. The provision requires individuals of all ages, and their dependents, to have “minimum essential coverage” of health care for the year or to qualify for an exemption. If an individual and dependents do not have the minimum coverage or an exemption, the individual may be required to make a penalty payment when filing a federal income tax return starting in the 2015 tax filing season.

If you are a servicemember, dependent, or Department of the Army civilian you likely already have the minimum coverage under your current health insurance plan. The following types of health care plans meet the “minimum essential coverage” definition under the new health care law:

• Employer-sponsored coverage, including self-insured plans, COBRA coverage and retiree coverage

• Most Medicaid coverage

• Certain types of Veterans health coverage administered by the Department of Veterans Affairs

• Most types of TRICARE coverage under chapter 55 of title 10 of the U.S. code

• Coverage purchased in the individual market, including a qualified health plan offered by the Health Insurance Marketplace

Coverage consisting solely of excepted benefits such as space available TRICARE coverage, Line of Duty TRICARE coverage, or Medicaid providing coverage that is limited to family planning or treatment of emergency medical conditions is not considered the minimum essential coverage required under the new health care law. If you have one of these limited health care policies, the IRS has indicated that it may excuse those enrolled under one of these plans from purchasing additional coverage for the 2014 year as long as the plan also offers comprehensive coverage (see IRS notice 2014-10).

The new health care law provides legal exemptions to the requirement to obtain minimum essential coverage for certain categories of people. If you qualify for one of the following exemptions, you may apply for an exemption certificate by going to the Health Insurance Marketplace at https://www.healthcare.gov/ and applying for an exemption certificate. You can also view an entire listing of exemptions at the same site. Some exemptions include:

• Religious conscience – You are a member of a religious sect that is recognized as conscientiously opposed to accepting any insurance benefits.

• Indian tribes – You are a member of a federally recognized Indian tribe

• Income below the income tax return filing requirement

• Affordability – You can’t afford coverage because the minimum amount you must pay for the premiums is more than eight percent of your household income

• Not lawfully present – You are not a U.S. citizen, a U.S. national or an alien lawfully present in the U.S.

Currently, there is nothing required to account for your healthcare coverage until you file your 2014 federal income tax return. When you file your 2014 tax return, your health care insurer will be required to provide you information showing you were covered during that year. If you did not have the minimum essential coverage required for that year or an exemption, you could be required to make a penalty payment or the IRS may offset the penalty against your tax refund.

For more information on the new health care law and how it might affect your 2014 tax return, go to http://www.irs.gov/uac/Affordable-Care-Act-Tax-Provisions. If you wish to discuss your particular situation with an attorney, contact the Fort Irwin Legal Assistance Office at 380-5321 and schedule an appointment. Our hours of operation are Monday through Friday, 8 a.m. – 4 p.m., and Thursdays, 1-4 p.m. The office is located on Barstow Road in building 288, across from the police station.




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