Affordable Care Act

The big change for 2019 for the Affordable Care Act (ACA) – or Obamacare – is that the penalty for not carrying health insurance has been repealed. And with no penalty, exemptions for the coverage requirement are no longer relevant.

The healthcare marketplace (healthcare.gov) is still operating, as are various state marketplaces, where you can shop for and buy health insurance. And if you need help paying for that insurance, the marketplace are still the place to go to apply for the Premium Tax Credit.

However, a few states still do require coverage, or you'll face a penalty on the state tax return if you don't have an exemption:

• California
• District of Columbia (Washington D.C.)
• Massachusetts
• New Jersey
• Rhode Island
• Vermont

While an exemption is no longer needed for federal returns, it might be important for your state return in the above areas.

Also note that the penalty is repealed only for individual taxpayers. The ACA requirement for certain employers to provide insurance is still in effect, as is the penalty for not doing so.

The ACA and Your Tax Return

There are certain exemptions that can excuse you and your family from being insured. If you think you qualify for an exemption, you can either file the exemption with your tax return at the end of the year or on the Healthcare Marketplace at any time, depending on which exemption you plan to claim.

If you do purchase insurance through the marketplace, you should receive a Form 1095-A by about mid-February. When you file your taxes, we’ll ask for the information from the form.

If you qualified for the Premium Tax Credit, you could have opted for advance payments of it to be paid directly to the insurance company. Since the credit amount you qualify for is tied to your income for the year, and that income hasn’t been earned yet when you apply for the credit, it’s necessary to “reconcile” those payments with the amount that you actually qualify for.

If you received too much in advance payments, compared to what you actually qualified for, once your income is known, you’ll have to repay that amount. That means you’ll owe more in taxes due, or you’ll get a lower return. Receiving too little, and you’ll get that difference back with a lower tax payment or a higher refund. Note: For tax year 2020, any excess amount of advance premium tax credit payments received doesn’t have to be repaid, according to the American Rescue Plan (ARPA).

Other 1095s

Again, Form 1095-A is the only Form 1095 that must be entered on your federal tax return. But there are a couple of other 1095s you could get:

• Form 1095-B is sent by insurance companies to those they cover. This one is just a notice to you, no need to enter it anywhere on your tax return.
• Form 1095-C should be provided by your employer if you’re covered by or eligible for an insurance plan at work. If you were covered by insurance at work, the 1095-C is just for your records, no need to enter on your return.

But: In some situations, you may have been eligible for affordable health insurance at work for only part of the year. If you instead got insurance through a health insurance marketplace, you’re not eligible for the Premium Tax Credit for months you were eligible for coverage at work. If you didn’t get the credit or don’t want to apply for it at tax time, the 1095-C is again just for your records. Otherwise, you’ll need the information on the 1095-C to report which months you were and were not eligible for affordable work coverage.

Also see:
Health Insurance Marketplaces
Getting Help Paying for Health Insurance Premiums
Minimum Coverage for the Affordable Care Act
Taxpayer FAQs