Affordable Care Act

Frequently Asked Questions

What is health care reform?
The Affordable Care Act (also known as Obamacare) requires Americans and legal residents to have health insurance. In addition, large employers are required to offer affordable health insurance that meets minimum value requirements.

What is the penalty for not having health insurance?
The penalty for not having health coverage in 2016 is 2.50% of household income above the filing threshold or $695 per adult and $347.50 per child, whichever is greater. Penalties, starting in 2017, will be adjusted for each year for inflation. Note: Penalty is capped at the national average premium for a Marketplace Bonze level plan.

How can I get insurance?
eSmart Tax can provide options to assist you with signing up for a qualified health plan. You can enroll in health insurance at your nearest Liberty Tax locationonline, or by calling 844-281-1604.

Do I have to buy insurance from the Health Insurance Marketplace?
No. Most people can keep their current insurance policy, including those covered under Medicare, TRICARE, or employer sponsored insurance. However, this coverage must meet the minimum essential coverage or minimum value requirements set by the Affordable Care Act.

Is health insurance from the Marketplace free?
No. However, the Marketplace is the only place where you can apply for subsidies to help lower your health care costs. The Marketplace can also help you figure out if you are eligible for Medicaid.

When is the next open enrollment period?
Open enrollment for 2016 runs from November 1, 2016 until January 31, 2017.

Can I sign up for health insurance outside of open enrollment?
Experiencing major life changes can make you eligible for a special enrollment period, such as:

  • marriage
  • having a child, adopting, or placing a child up for adoption
  • moving outside of your previous insurance plan’s area
  • gaining citizenship or lawfully present status
  • being a member of a federally recognized Indian tribe, or as an Alaska Native
  • being released from incarceration
  • involuntarily losing previous health insurance coverage
  • if already enrolled in an individual Marketplace plan and changes in income affect your eligibility for health insurance subsidies


What if I can’t afford insurance?
Check to see if you qualify for a federal subsidy to help with the cost of health insurance applied for on the Marketplace.  You can also click on HealthCare.gov Exemption Screener to see if you qualify for coverage exemption for being uninsured.

Since the amount I would pay for health insurance is based on my income, do I have to prove how much money I earn?
Yes. The Health Insurance Marketplace will verify your income through your tax return on file with the IRS, Equifax, or by reviewing paystubs.

Since subsidies are based on my income, what happens if my income changes during the year?
You should log into your Marketplace account and report any changes to your income or family size in order to prevent any confusion when it’s time to file taxes.

How can I get a subsidy?
Subsidies are only available through the Health Insurance Marketplace. Liberty Tax provides a subsidy calculator to help you determine if you qualify for any subsidies that will help reduce insurance costs for you and your family.

Can I qualify for subsidies even if I don’t pay taxes?
Yes. However, if you receive an advanced premium tax credit then you will be required to complete a tax return, even if your income is below the tax filing threshold.

Is anyone exempt from the health insurance requirement?
If you did not have health care coverage starting January 1, 2016, you may be subject to a penalty unless you qualify for one of the following exemptions:

  • you are a member of a federally recognized Native American tribe
  • you are a member of a federally recognized health care sharing ministry
  • you are a member of a recognized religious sect with faith-based objections to health insurance
  • you are incarcerated
  • you are an undocumented immigrant living in the U.S.
  • you were only uninsured for less than 3 consecutive months during the year
  • the lowest cost plan available through the Health Insurance Marketplace would cost more than 8.13% of your income
  • your income is too low to be required to file a tax return; (in 2016, that’s less than $10,300 for individuals and less than $20,600 for a family)
  • you earn too much to qualify for Medicaid, but not enough to qualify for health insurance subsidies, and reside in a state that did not expand Medicaid
  • you experienced a hardship which prevented you from acquiring health insurance


How can I apply for an exemption?
eSmart Tax’s Affordable Care Act Health Exemptions Guide can help you complete an application for a coverage exemption. If you qualify, some exemption may take approximately 2-8 weeks to receive an Exemption Certificate Number (ECN) from the Health Insurance Marketplace. Your ECN is needed to file for some exemptions on your taxes.

Are businesses required to offer insurance to employees?
Beginning in the 2016 tax year, businesses with 50 or more full-time employees are required to offer insurance to employees. Businesses that do not offer insurance coverage to employees could face tax penalties. Smaller businesses, or businesses that do not meet the threshold requirement for full-time employees, are not required to offer health insurance to employees.

If my employer offers health insurance, can I still use the Marketplace?
Yes. However, you cannot qualify for any subsidy programs unless your employer offers coverage that isn’t affordable or doesn’t meet minimum value requirements. In addition, your employer cannot contribute to your premiums if you purchase a Marketplace plan.

Are there tax subsidies available for smaller employers who offer health insurance to full-time employees?

Yes. For smaller companies that want to offer insurance to employees, tax credits are available to offset part of the costs if the company purchases coverage through the SHOP Marketplace.

I am the parent of a college student. Can I keep my child on my health plan?
If your child is under the age of 26, you can keep him or her on your health insurance plan. Those over the age of 26 will need to have their own qualifying health plan or qualify for a coverage exemption to avoid a penalty on their taxes.


Affordable Care Act (ACA): A law passed in 2010 requiring Americans to maintain health insurance. The goal of the act is to help control the increasing cost of health care and establish affordable health insurance options.

Family Size: The total number in a family. This may include the taxpayer, spouse, and dependents.
Ex. TJ is married and has two dependents. TJ’s family size is:

TJ: 1
TJ’s Spouse: 1
Child One: 1
Child Two: 1
Family Size: 4


Federal Poverty Level: The amount of income a family needs for food, clothing, transportation, shelter and other necessities. It changes every year and in 2016 was $11,880 for one person; for each additional family member add $4,160. The FPL in Alaska and Hawaii vary from the rest of the country. The Federal Poverty Level is recalculated every year by the Census Bureau.

Full-Time Employee: Determined on a monthly basis. Employee is employed, on average, at least 30 hours/week or at least 130 hours/month. The calculation includes all paid hours including but not limited to: vacation, military duty, holiday, sick pay, jury duty, disability.

Health Insurance: A type of insurance coverage that pays for medical and surgical expenses that are incurred by the insured.

Individual Shared Responsibility Payment aka Penalty: An additional tax that individuals will have to pay if they don’t have a health insurance plan which meets minimum value or minimum essential coverage and cannot qualify for an exemption. This penalty is paid on the tax return. An individual or family can have up to 2 consecutive months per year without coverage before they have to pay the fine.

Large Employer Mandate: Employers with more than 50 full-time equivalent employees must provide a health insurance option for its full-time employees or be subject to tax penalties. The mandate became effective for employers with 50 or more employees on January 1, 2016.

Look Back Measurement Period (applies to employer-sponsored plans): Method to determine if a company is a large or small employer by using a period in time, determined by the employer, which is no longer than 12 months and no shorter than 3 consecutive months. The 2016 company status will be determined by their 2015 look back period.

Minimum Essential Coverage: The type of health insurance that individuals must have in order to meet ACA requirements and avoid tax penalties. The plan must include the minimum essential benefits. Types of plans include: employer-sponsored plans, employer-sponsored retiree health plan, Medicare, Medicaid, CHIP, TRICARE, grandfathered health plans, coverage from a health plan purchased in the Exchange.

Premium Tax Credit (PTC): Federal subsidies that reimburse a portion of monthly premiums, lowering the cost of health insurance purchased from a Health Insurance Marketplace. The credit is available to individuals whose annual income is between 100% and 400% of the Federal Poverty Level. Individuals can choose to receive their premium tax credit through their tax return, or opt to receive them in advance (see Advanced Premium Tax Credit.)

Qualified-Health Plan: A health insurance plan that meets requirements under the ACA. This includes key characteristics such as (but is not limited to) minimum essential coverage and limits on deductibles, copayments, and out-of-pocket maximum amounts.

Subsidy: Assistance to help middle- and low-income individuals pay for health insurance. There are two types of subsidies: premium tax credits and cost-sharing assistance