FACT SHEET
Why the Affordable Care Act Matters For
Women: Preparing for Tax Time
APRIL 2015
The Affordable Care Act (ACA) has helped make health insurance more affordable for
millions of women and families. To ensure that health plans in the marketplace remain
affordable and accessible, the ACA offers financial assistance in the form of premium tax
credits and cost-sharing reductions to individuals purchasing coverage. The law also
requires most individuals – with some exceptions – to enroll in minimum essential coverage
(MEC) or pay a tax penalty. (The law’s requirement to have minimum essential coverage is
often referred to as the “individual mandate.”) Both the requirement to enroll in coverage
and one’s eligibility for financial assistance depend on an individual’s income and household
size. The federal government will confirm whether or not an individual has met her or his
minimum essential coverage responsibility – and whether she or he has received the correct
amount of financial assistance – by reviewing her or his annual tax return.
Everyone subject to the individual mandate must account for their health coverage when
they file their annual income taxes.1 Likewise, all marketplace enrollees who wish to claim
a premium tax credit or who received advance premium tax credits must file federal income
tax returns. It is therefore critically important that individuals and families know what to
expect at tax time and what to report on their tax returns. As more women and families
sign up for insurance in state and federal marketplaces, it is important that they take the
right steps to ensure that their tax returns – inclusive of income, household size, health
coverage and financial assistance information – are accurate.
Reporting Your Health Coverage
The ACA requires almost everyone to enroll in a minimum level of health coverage, with
some exemptions. Individuals who are subject to the individual mandate need to report
their health coverage on their annual tax returns. Those who fail to enroll in minimum
essential coverage – or who fail to report their coverage – and do not qualify for an
exemption may be required to pay a tax penalty.
Do people enrolled in health plans need to report that they have coverage?
For most people, the answer is yes. In order to avoid paying a penalty, individuals who are
subject to the individual mandate are required to report on their tax returns that they have
minimum essential coverage.2 Enrollees will be mailed the forms and information they need
to report their enrollment in minimum essential coverage.
1875 Connecticut Avenue, NW | Suite 650 | Washington, DC 20009
202.986.2600 | www.NationalPartnership.org
Who qualifies for an exemption from the individual mandate?
The ACA exempts some people from the individual mandate. Individuals who believe they
qualify for an exemption should carefully consult all state and federal requirements
pertaining to enrolling in coverage. More information on who may qualify for an exemption
from the penalty can be found on HealthCare.gov.
Amongst other reasons, you may qualify for an exemption if:
 You were uninsured for less than three months of the year;
 The lowest-priced plan sold in your state’s marketplace was more than eight percent
of your household income;
 Your income is low enough that you are not required to file federal income taxes;
 You are ineligible for Medicaid solely because your state did not expand Medicaid
eligibility as allowed under the ACA;
 You are enrolled in pregnancy-related Medicaid coverage that is not considered
minimum essential coverage (exemption only applies to the months in which you are
enrolled in the program);
 You are a member of a federally recognized tribe or you are eligible to receive services
from an Indian Health Services provider;
 You are currently incarcerated and not being held pending charges; or
 You are an undocumented immigrant.
The law also makes exceptions for certain citizens who live outside of the country. Citizens
who lived outside the United States for at least 330 days out of the year or who are bona
fide residents of a foreign country for the entire tax year are treated as though they have
minimum essential coverage.3
How do I claim an exemption?
For most people, exemptions must be reported to the Internal Revenue Service (IRS) on IRS
Form 8965. For some exemptions, you must first obtain an exemption certification through
the marketplace in the state where you live and claim the exemption on your tax return.
Other exemptions, however, only need to be claimed on your tax return. Detailed
instructions for applying for and claiming exemptions can be found here.
How much is the tax penalty for not enrolling in coverage?
Individuals who failed to maintain minimum essential coverage and who do not qualify for
an exemption may be required to pay a tax penalty when they file their annual tax returns.
The shared responsibility penalty is either a percentage of your annual income or a flat fee
for each uninsured adult and child in your household, whichever is higher. Penalty
calculations are prorated for those who had minimum qualifying coverage during part of
the year.
 The 2014 penalty percentage rate is 1 percent of your income that is above the
minimum filing threshold for your household size.
NATIONAL PARTNERSHIP FOR WOMEN & FAMILIES | FACT SHEET | PREPARING FOR TAX TIME
2
 The 2014 penalty flat rate is capped at a total of $285 per household. The flat rate cap
is calculated by adding $95 for each uninsured adult and $47.50 for each uninsured
child in the household.4
For 2014, your shared responsibility penalty will not exceed the annual national average
premium for a bronze-level health plan available on the marketplace for your household
size. Consumers can get more information about the shared responsibility penalty here,
including examples of how to calculate the penalty.
Finally, if you owe a penalty for not having coverage in 2014, you may still be able to enroll
in marketplace coverage for 2015. Individuals who faced a penalty for not having coverage
in 2014 and didn’t know that open enrollment closed on February 15, 2015, may be eligible
to enroll in coverage through a special enrollment period. Information on who may still be
eligible to enroll in marketplace coverage is available here. This special enrollment period
closes on April 30, 2015.
What if someone cannot pay the tax penalty for not having minimum essential coverage?
The IRS frequently works with individuals who cannot afford to pay the taxes they owe. For
example, the IRS may offset the penalty you owe for not having health coverage by
reducing other tax credits or refunds that you may be due. (The IRS is not permitted to use
a lien to collect the tax for not having minimum essential coverage.5) Individuals should
continue to file their taxes on time, pay as much of the penalty as they can, and contact the
IRS about payment options.
Consumers can find more information at the IRS’s website here.
Reporting Financial Assistance
The ACA helps make health coverage more affordable by making financial assistance
available to eligible marketplace enrollees. Financial assistance for health coverage comes
in the form of premium tax credits and cost-sharing reductions. Eligibility for premium tax
credits and cost-sharing reductions depends on an individual’s income and household size
for the year. (See the National Partnership’s fact sheet on premium and cost-sharing
assistance to learn more about eligibility for premium tax credits and cost-sharing
reductions.) At tax time, consumers will be required to account for the previous year’s
income, household size, and any advanced premium tax credits received. Additionally,
eligible enrollees who did not choose to receive their premium assistance at the point of
enrollment have the opportunity to claim the tax credit owed to them when they file their
income tax return.
Individuals who received or want to claim premium tax credits must complete and submit
IRS Form 8962, “Premium Tax Credit,” with their tax returns. To help enrollees fill out this
form, state marketplaces will send enrollees a tax form called 1095-A, “Health Insurance
Marketplace Statement.” The 1095-A is intended to assist consumers with completing their
tax returns, including IRS Form 8962.
In January, 1095-A forms were mailed to consumers.6 Some marketplace enrollees have
reported problems with their 1095-A forms. Individuals who are unable to file their tax
NATIONAL PARTNERSHIP FOR WOMEN & FAMILIES | FACT SHEET | PREPARING FOR TAX TIME
3
returns by April 15, 2015, because their 1095-A forms were delayed or incorrect should file
for an extension by filing Form 4868, “Application for Automatic Extension of Time To File
U.S. Individual Income Tax Return.”7 Individuals who received delayed, incorrect or
problematic 1095-A forms and filed for an extension will not face a penalty so long as they
file their taxes by October 15, 2015.8 The IRS is expected to release guidance shortly that
implements penalty relief for eligible individuals, as long as they file their returns by
October 15.
Are recipients of premium assistance required to file income tax returns?
 Yes. Anyone who receives premium tax credits must file an income tax return for the
year they received this assistance. Failure to file taxes after receiving premium tax
credits can disqualify an individual from receiving premium assistance in subsequent
years.9
 Additionally, any eligible individual who is seeking to claim premium tax credits not
yet received must file an income tax return.
 Generally, married couples must file taxes jointly to claim premium tax credits. There
are some exceptions to this requirement, including spousal abandonment and cases
of domestic violence.10 More information on circumstances in which married couples
are not required to file jointly in order to claim their premium tax credits can be found
here.
My annual income is different than what I reported to my marketplace when I enrolled in
coverage and I have been receiving financial assistance. What should I expect when I file
my tax return?
Failing to promptly update the marketplace about changes in your income or household size
can cause you to receive the wrong amount of financial assistance. If you received more
premium assistance than you were eligible for during the preceding year, you likely will be
required to re-pay a portion of your premium tax credits at tax time. In contrast,
unreported changes in income or household size could mean you received less assistance
than you qualified for and, in that case, you may receive an additional premium tax credit
that either reduces the amount of taxes you owe or gives you a refund at tax time.11
When you file your taxes, you will use IRS Form 8962 to calculate the difference between
the premium assistance you received and the assistance you actually were eligible for,
based on your income and household size. If your income at tax time is higher than what
you anticipated at enrollment, you may be required to pay back all or a portion of any
overpayment with respect to advanced premium tax credits received:
 If your income is at or above 400 percent of the federal poverty line (FPL), you will
owe the full amount of the overpayment.
 If your income is less than 400 percent FPL, there is a cap on what you will owe back.
Unlike premium tax credits, you do not have to reconcile any cost-sharing reductions that
you received the previous year. Cost-sharing subsidies do not affect your tax liability.12
Learn more about the premium tax credit reconciliation process here. It is important to
NATIONAL PARTNERSHIP FOR WOMEN & FAMILIES | FACT SHEET | PREPARING FOR TAX TIME
4
update your marketplace as soon as possible throughout the year whenever changes in
income or household size occur. Learn about what to report and how to report changes here.
1 U.S. Internal Revenue Service. (August, 2014). Questions and answers on the individual shared responsibility provision. Retrieved from: http://www.irs.gov/uac/Questions-andAnswers-on-the-Individual-Shared-Responsibility-Provision
2 U.S. Internal Revenue Service. (August, 2014). Questions and answers on the individual shared responsibility provision. Retrieved from: http://www.irs.gov/uac/Questions-andAnswers-on-the-Individual-Shared-Responsibility-Provision
3 U.S. Internal Revenue Services. (August, 2014). Questions and answers on the individual shared responsibility provision. Retrieved from: http://www.irs.gov/uac/Questions-andAnswers-on-the-Individual-Shared-Responsibility-Provision
4 Computation of share responsibility payment (2014) 26 CFR § 1.5000A-4 (2014).; U.S. Centers for Medicare & Medicaid Services. (2014). Exemptions from the fee for not having
health coverage. Retrieved from: https://www.healthcare.gov/exemptions/
5 U.S. Internal Revenue Services. (August, 2014). Questions and answers on the individual shared responsibility provision. Retrieved from: http://www.irs.gov/uac/Questions-andAnswers-on-the-Individual-Shared-Responsibility-Provision
6 26 U.S.C. § 6055 – Reporting of health insurance coverage.
7 U.S. Internal Revenue Services Form 4868. Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. Available at http://www.irs.gov/pub/irspdf/f4868.pdf
8 U.S. Internal Revenue Services, “Statement from a Treasure Spokesperson on Forms 1095-A.” Available at: http://www.treasury.gov/press-center/pressreleases/Pages/jl10018.aspx
9 Center on Budget and Policy Priorities (July, 2013). Premium tax credits: Answers to frequently asked questions. Retrieved from: http://www.cbpp.org/files/QA-on-PremiumCredits.pdf
10 Angeles, J., & Straw, T. (July, 2014). The health care assister’s guide to tax rules: Determining income & households for Medicaid and premium tax credits. Center on Budget
and Policy Priorities. Retrieved from: http://www.healthreformbeyondthebasics.org/wp-content/uploads/2014/07/The-Health-Care-Assister-Guide-to-Tax-Rules.pdf
11 Center on Budget and Policy Priorities (July, 2013). Premium tax credits: Answers to frequently asked questions. Retrieved from: http://www.cbpp.org/files/QA-on-PremiumCredits.pdf
12 Center on Budget and Policy Priorities (September 2013). Key facts you need to know about: Cost-sharing reductions. Retrieved from:
http://www.healthreformbeyondthebasics.org/cost-sharing-charges-in-marketplace-health-insurance-plans-part-2/
NATIONAL PARTNERSHIP FOR WOMEN & FAMILIES | FACT SHEET | PREPARING FOR TAX TIME
5