Health Insurance Penalty On Your Taxes? Ways To Avoid It In 2015
Posted on: 17 April 2015
Now that taxes are done, many families have discovered that the Affordable Care Act has hit their wallets unexpectedly. Whether it turned out that you had to repay a portion of premium subsidies or you paid a penalty for not having coverage, there are steps you can take now to avoid a bill again next spring.
Subsidy Repayment
If you had to repay part of your subsidy payments, it was because you underestimated your income on the application. Now is the time to go to your state's healthcare exchange and adjust your estimated income for the current year. Estimate higher in order to avoid having to repay once again.
The Individual Responsibility Payment
Commonly called 'the penalty', the Individual Responsibility Payment is the price for not having health coverage for all members of your tax family. And, while many taxpayers believed that the penalty would be less an a hundred dollars, it added up quickly for families with more than one uninsured member or higher income. And it will go up to a minimum of $325 in 2015.
There are several things you can do to avoid another penalty:
- Apply for Medicaid, especially in states where it was expanded. This may include families who earn up to 138% of the federal poverty level for their size.
- Apply for state-sponsored children's health plans, often called CHP or CHP+. Some plans require a co-pay based on income. Since the ACA penalty varies according to the persons who are not covered, getting your children insured would reduce your penalty significantly even if the adults remain uninsured.
- Go over the allowed exemptions to the penalty. Many families qualified for exemptions although they did not realize it.
- Look closely at both spouses' workplace insurance. Once again, even getting one spouse covered will reduce your overall penalty if necessary.
- Consider a high deductible plan that qualifies for a health savings account. Health savings accounts, or HSAs, are accounts you can open at your own bank to put aside tax-free money to pay for future health costs - as much or as little as you want. A high deductible plan generally has much lower premiums and you can put the savings aside to pay for future deductibles.
- Shop your state's health insurance marketplace. With the first year of the ACA under their belts, many health insurance exchanges are operating better this year. Be sure to fully complete the process in order to determine what amount of premium subsidy you would qualify for. This is often not determined until the end of the application, and many consumers stop once they see the initial premium costs.
- Shop for private individual medical insurance if you're not eligible for subsidies due to income or are unhappy with the marketplace's offerings. The best deals and most options for you may come from insurance agents with whom you already have a relationship for other personal or business insurance.
The 2015 tax filing season was a wake-up call for some families who had not understood or not paid attention to the Affordable Care Act's changes and timelines. But now that you know the consequences, you can take action both to avoid new taxes and ensure your family's health. For more information about health insurance, contact a company like Canopy.
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