Government's New Year's Resolution: Grant All Americans Affordable Health Care Coverage

Did you remember to cheers the ACA? You know that, ahem - controversial, requirement to have health insurance coverage that began January 1, 2014. Love it or hate it, most taxpayers must have minimum health insurance coverage or pay a penalty when they file their tax return in 2015. The good news is that you may qualify for a tax credit to help offset the cost of health insurance. That credit is generally paid directly to your health insurance company. You, then, only pay the part of the premium that the credit doesn't cover. But, getting that credit requires you to file a tax return to reconcile your payments and actual credit due. Sound confusing? It can be, so let me break it down for you.

Who must have health insurance? Probably you. Actually, any non-exempt person who is a U.S. citizen, national, or a lawful alien in the U.S. must have minimum (health insurance) coverage or face a tax penalty.

Who is eligible for the Credit? Maybe you. As long as you cannot be claimed as a dependent by another person, do not have coverage available through your employer, your income falls within a specified range, and you do not qualify for other types of coverage such as Medicaid or Medicare, then you may qualify for tax credits to help with the cost of purchasing coverage through your state's Health Insurance Marketplace. If you are married, your spouse must meet all the qualifications as well and you cannot file your tax return using the filing status of "Married Filing Separately."

To help you determine if your family income is within the credit range, check out the simple list on The exact amount of credit will be determined by your family income when you file your tax return with lower incomes receiving higher credit amounts and higher incomes receiving lower credit amounts.

Who is eligible for the Advanced Premium Tax Credit? Again, maybe you. You must be eligible to purchase your insurance through the Marketplace (you don't have affordable minimum coverage available through an employer and you don't qualify for other insurance plans such as Medicare or Medicaid) and your income must be within the Premium Tax Credit range. If you meet the eligibility criteria, the Marketplace will calculate your potential credit based on the income information you submit when you apply. If you are eligible for the advanced credit you have the option to accept the credit in the form of monthly payments made directly from the U.S. Treasury to your insurance carrier or you can decline the advanced payment option and claim the full credit when you file your tax return. The advanced credit payments are designed to help you pay for health insurance without the hit of full out of pocket cost. If your income is in the lower range, the credit could be big enough to cover the full cost of your insurance premium. Also, you may qualify for special cost-sharing reductions which can lower your deductible.

The advanced credit payment is a big help when your budget is already stretched tightly, but be careful with this option. If your income or family size changes anytime during the year, the amount of credit you will be eligible for may change. All taxpayers who received the advanced credit payments must file a tax return for 2014 to reconcile the amount of advanced payment against the actual credit allowed. If you received an advanced credit based on estimated income that turns out to be less than your actual income for the year, you could owe taxes on that amount. At the same time, if you over-estimate your income, you could be due an additional credit at tax time.

Who will be assessed a penalty? Hopefully - not you. But, anyone on your tax return that does not have minimum (health) coverage during the taxable year and does not qualify for an exemption could cause a penalty situation when you file your tax return. The penalty can be as much as 1% of your total family income for the entire year. And next year, that amount doubles to 2% of total income. For example, a single taxpayer with a $40,000 income and no health insurance could pay a penalty of as much as $300 in 2014 and $600 in 2015. Yikes.

What to do now? The new rules and regulations governing health insurance and taxes are every bit as confusing and complex as health care itself. So if you think you might qualify for financial help getting health coverage or if someone in your family was uninsured for even just part of 2014, you should seek advice from a tax professional.