The Affordable Care Act, endearingly known throughout the media and politics as Obamacare, was designed to increase the quality, availability and affordability of health insurance for all Americans. By expanding Medicaid eligibility and creating state-based insurance exchanges where individuals and small businesses can purchase health insurance plans, the Affordable Care Act could put consumers in charge of their own health care.
Since the Individual Mandate is now in effect, taxpayers should be aware that the Affordable Care Act affects taxpayers in the following ways this season:
Depending on age and living status, the changes taxpayers can expect as a result of the ACA include:
- Single Person- For those who have insurance, their plan must meet minimum essential coverage in order to not pay a penalty. Plans that cover only eye or dental care, or plans that only give a discount on services aren’t considered full health coverage. Those who have this kind of insurance or no insurance at all will need to get full coverage or else pay the annual fee.
- Married Couples- To avoid paying the annual penalty on income taxes, all married couples must have a health insurance plan with benefits. Those who have plans that lack dental or eye care coverage, as well as couples with no insurance must purchase full coverage to avoid paying a penalty annually.
- Seniors- Under the Affordable Care Act, all seniors are covered by Medicare. As long as those over the age of 65 enroll in Medicare or another insurance plan, they will not have to pay the annual penalty.
- Large Business Owners- Larger business (those with 50 or more full-time
employees) are required to offer health insurance with minimum essential
coverage to all of their full-time employees. If the business fails to meet the
requirements listed in the statute, they will be forced to pay an annual penalty. This penalty for business owners however will not go into effect until 2015 in order to give owners time to prepare and find appropriate coverage for their employees.
- Small Business Owners- Small businesses (defined as those with less than 50 full-time
employees) are not required to provide health insurance in order to avoid the annual penalty. Those small businesses who choose to offer coverage however, may
qualify for an annual tax credit.
In 2014, the fee for uninsured people is going to cost $95 per adult. The fee for uninsured children is going to cost $47.50 per child. This amount will increase each year, from 1% of a household's total income in 2014 to 2.5% of a household's total income in 2016. For more information on how the Affordable Care Act can affect you, please visit The Tax Doctor.