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Affordable Care Act Impact on 2014 Individual Tax Returns

Steve Lessels

February 5, 2015

2014 will be the first year the Affordable Care Act has impacted individual tax returns. Starting in 2014, individuals must have qualifying health care coverage, qualify for a health coverage exemption, or make a shared responsibility payment.

Taxpayers should be aware of any 2014 forms they receive early in 2015 related to health care coverage. These forms include important information needed for preparation of individual tax returns for 2014 and should be provided to us along with other tax return related documents. Health care coverage documents which taxpayers might receive include the following:

  • Form 1095-A - Health Insurance Marketplace Statement which summarizes health care coverage obtained from the Marketplace
  • Form 1095-B – Health Insurance Coverage Statements sent by health insurance providers to prove coverage (voluntary for 2014)
  • Form 1095-C – Employer-Provided Health Care Insurance Offer and Coverage Insurance sent by employers (voluntary for 2014)

Many taxpayers will have qualifying health care coverage (known as minimum essential coverage). Compliance with this requirement for 12 months of the year will be shown on the Form 1040 by checking a box in the Other Taxes section of page 2 of Form 1040.

Minimum essential coverage is defined as:

  • Coverage provided by an employer, including COBRA and retiree coverage
  • Coverage purchased in the individual market and the new Marketplace
  • Coverage under specified government sponsored programs.

If an individual does not have minimum essential coverage, the individual may qualify for an exemption from the Marketplace or the IRS depending on the type of the exemption. The exemption is reported on Form 8965 (Health Care Coverage Exemptions).

If an individual taxpayer does not have minimum essential coverage or does not qualify for an exemption, the individual would need to make a shared responsibility payment which would be calculated on worksheets related to Form 8965 and paid with the 2014 tax return.

Taxpayers who have enrolled in health insurance coverage through the Marketplace may be eligible for the Premium Tax Credit (PTC) which is calculated on Form 8962 (Premium Tax Credit). This form determines a net premium tax credit through reconciling the total premium tax credit as calculated with any advance payments of the PTC. A federal income tax return must always be filed by a taxpayer receiving a PTC, and would accompany Form 8962.

Please contact us at 804.270.6980 if you have any questions or would like to discuss this or other accounting and tax matters.

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