Please remind your clients that the Open Enrollment Period for Marketplace Plans ends on Jan. 31, 2016. This is the yearly period from Nov. 1 to Jan. 31 when people can enroll in a health insurance plan through the Health Insurance Exchanges. Folks may qualify for the Special Enrollment Period, allowing them to enroll outside of Open Enrollment if they have certain life events, such as getting married, having a child or losing other health coverage. For more information, see the infographic below or visit Healthcare.gov. You can apply for Medicaid or CHIP coverage anytime of the year.
Penalty for not Being Insured Increases in Tax Year 2016
The ACA penalty applies for any given month that the taxpayer, spouse or dependents don’t have qualified coverage or an exemption. The individual shared responsibility payment is greater of:
- Percentage of household income above filing threshold, or
- Flat dollar amount
The penalty is being phased in over the following timeline.
ACA Subsidies/Premium Tax Credit Considerations
When your clients go to the Marketplace to obtain health insurance, the exchange will estimate the amount of a subsidy or tax credit the taxpayer is eligible for. The Marketplace will determine the subsidy based on the information you provide, such as the number of household members, projected household income and whether anyone in the household is eligible for employer-based coverage.
Taxpayers may be eligible for the premium tax credit if their household income falls between 100 percent and 400 percent of the federal poverty level of the previous year. Here is the federal poverty level for 2015:
- $11,770 for individuals
- $15,930 for a family of 2
- $20,090 for a family of 3
- $24,250 for a family of 4
You can elect to have your estimated credit paid in advance and offset your insurance premiums, or you can choose to receive your credit after year end on your tax return. Regardless whether you choose to receive the subsidy during the year, you must file a tax return in order to reconcile your advance credit with the true amount of the credit, as calculated on actual tax information and income. If your up-front subsidies are greater than your premium tax credit at year end, you need to pay all or a portion of the credit back to the government. If the premium tax credit at year end is greater than the up-front subsidies, then you will receive a refundable credit for the difference.
(Click to enlarge.)