How Health Insurance Affects Your Taxes




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The connection between health insurance and taxes is foggy, at best. Most only know that if they don’t have insurance they will be penalized. We’ve rounded up the most important information for you.

 

Acceptable Types of Coverage

  • Any insurance purchased through the Health Insurance Marketplace
  • “Grandfathered” individual plans from March 23rd, 2010 or earlier
  • Job based plans
  • Medicare part A or B
  • Medicaid, except for limited coverage plans
  • Children’s Health Insurance Program (CHIP)
  • Coverage under a parents plan
  • Most student health plans
  • Peace Corps volunteer coverage
  • Some types of veteran health coverage
  • Most Tricare plans
  • Department of Defense Nonappropriated fund health benefits program
  • Refugee Medical Assistance
  • State High Risk pools for plans or policy years that started on or before December 31st, 2014

 

Unacceptable Types of Coverage

  • Vision or dental only
  • Workers compensation
  • Coverage for only a specific disease or condition
  • Medical service discount plans

 

Penalties

Higher of:

  • $325 or
  • 2%
  • Penalty will go up to $695 or 2.5% for 2016 taxes
  • If you did not have coverage for only part of the year, the penalty is 1/12 of the annual amount for each month you were not covered

 

Tax Payment Exemptions

  • Uninsured for less than three months
  • Lowest priced coverage costs more than 8% of your income
  • You don’t need to file because of low income
  • Your (recognized) religion objects to insurance
  • You are in a recognized health sharing ministry
  • You are Native American and eligible for services through an Indian Health Services provider
  • You are not a U.S citizen, U.S national, or lawfully present alien
  • You are incarcerated

 

Hardship Exemptions

  • Filed for bankruptcy in the last six months
  • Were homeless
  • Had medical expenses you could not pay in the last 2 years
  • Are a recent victim of domestic violence
  • Had an individual plan cancelled and could not afford other Marketplace plans
  • Suffered from a fire, flood, or other natural or human caused disaster that substantially damaged your property

 

Remember to have your taxes done before April 18th, 2016. If you do not have insurance yet, take advantage of your Special Enrollment Period, which you qualify for when you give birth to your baby,  to avoid paying a penalty on next year's taxes.

 

By: Alecia Stanton

 







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