More Affordable Care Act information coming to Americans
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Americans could find this tax season more confusing than usual, due to the Affordable Care Act.
Roughly 75 percent of tax filers will just need to check a box on their tax return indicating that they had insurance in 2014, the U.S. Department of Health and Human Services and the Treasury Department said Thursday.
But those who purchased a health insurance plan last year through the law and received a tax credit will, for the first time, receive a new form – called 1095-A — in the mail to ensure they received the correct amount of financial assistance based on their income.
Some may wind up owing the government money back or getting a smaller tax refund if their income was underestimated last year, though the opposite is also possible, if they overestimated.
Meanwhile, those who went without insurance for more than three months last year may either have to file for an exemption or pay a penalty.
The penalty for not having insurance in 2014 is $95 per person or 1 percent of your yearly household income, whichever is highest, Health and Human Services has said. That fee will increase to $325 per person in 2015 or 2 percent of your income.
The Obama administration said they will reach out to those people who would be affected by email, phone and text to make sure they’re aware of the changes, and also launch additional resources to help consumers prepare for tax filing season “in the coming weeks.”
“We are working to ensure that whatever their experience, consumers can easily access clear information since this is the first year they will see certain changes to their tax returns,” said Treasury Secretary Jacob J. Lew in a statement.
Tax analysts have said that they expect this tax season to be more complicated than past ones, in part because tax filers may be confused about what the new requirements mean for them.
“This tax season is the first time people will experience the financial consequence of the individual mandate, and it will bring additional paperwork and some surprises for taxpayers,” said Michael Mahoney, healthcare expert and senior vice president of consumer marketing for GoHealth.
In addition to working with a trusted advisor to help them file their tax credit, Mahoney also recommended that consumers applying in the current open enrollment period for 2015 insurance plans, be careful not to overestimate or underestimate their household income, to avoid an unpleasant surprise at tax time.
The open enrollment period ends Feb. 15.
More than 217,000 people in Illinois had bought a health insurance plan on the online marketplace as of April 19, the most recent figure available. Of those, 77 percent of Illinois residents got help to pay for health insurance, the federal government has said.