Questions about insurance? TurboTax helps explain the Affordable Care Act
By Maria Cote
If your head spins and your palms sweat when you hear the words, “Affordable Care Act,” take a deep breath and calm down, says Lisa Greene-Lewis.
The lead CPA with TurboTax has some soothing words for taxpayers wondering what to expect when filing their 2013 taxes. We posed a few questions that are top on many Americans’ minds:
ShopAtHome.com: What are some of the most important aspects of the ACA that U.S. consumers need to know?
Lisa Greene-Lewis: First, that starting in 2014, most Americans are required to have health insurance. Second, many Americans are worried about how they’ll be able to afford insurance. There is assistance for some uninsured Americans. A tax credit will be applied to their insurance premium in 2014, when the insurance goes into effect.
SAH: Who does not need to worry about the Affordable Care Act?
LGL: If you already have health insurance, you’re already covered under the new law. So people with employer-provided insurance or who already have insurance are covered. Also, people covered by Medicaid and Medicare are not affected, nor are people who make under the IRS filing threshold. A few other exceptions include American Indians, financial hardship, incarceration and if you are a member of a religious sect with objections to insurance.
SAH: What’s the most common misconception?
LGL: That the requirement to purchase health insurance impacts your 2013 taxes. The requirement to purchase health insurance does not impact your 2013 taxes. The provision of the law requiring all Americans to have health insurance does not start until Jan. 1, 2014. Also, people are confused about whether any parts of the law have been extended or changed. They don’t know the difference between individual mandate, requiring individuals to purchase health insurance by March 31, 2014, and the employer mandate. The individual mandate is still going forward; the employer mandate has been extended to 2015.
SAH: Where can the uninsured or the self-insured go to shop for and purchase health insurance?
LGL: Starting Oct. 1, they can go online to their state’s health insurance marketplace. You can access your state marketplace through heathcare.gov. In addition, if your state did not set up a marketplace, you can go to that site to purchase insurance. Insurance plans in the marketplace will be offered by private insurance companies, and all have to offer the same essential medical coverage, offered in four levels of plans.
SAH: What if someone makes a decent living as an independent contractor and chooses not to buy insurance. What’s the penalty?
LGL: In 2014, if you are required to purchase health insurance and you don’t do so by March 31, 2014, you will incur a penalty of $95 per individual in the household. If you have children, it’s $47.50 per child, and the penalty caps out at $285 per year for the household. Or, at an income over $20,000 for a single individual (over $55,000 for a married couple) it would be about 1 percent of that income. This penalty will be assessed in 2014, but you won’t pay it until you file your 2014 taxes in 2015. Penalties go up each year. By 2015, the annual penalty will increase to $325 per adult; by 2016, it’s $695 per adult, and the percentages go up, too.
SAH: Is there anything else people need to know about the exchanges?
LGL: Yes: Timing. The exchanges started Oct. 1, and people have until a March 31, 2014 deadline to purchase insurance. If they miss that deadline, they have to wait until the next enrollment period, which would begin in October 2014. That is unless they have a life change, like marriage or job loss. Then they can get insurance on the marketplace anytime.
SAH: Any last advice for tax filers?
LGL: Don’t panic and don’t freak out: The requirement to purchase health insurance doesn’t impact your 2013 taxes. And go to the answer exchange, TurboTax AnswerXchange. It’s a social community where you can get answers to your personal questions related to your healthcare, find out if you’re eligible for health insurance in the marketplace and find out if you’re eligible for a subsidy.
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