health care reform

How the Affordable Care Act will Affect Individuals and their Tax Return

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The information on this page is to give you a brief introduction to how the Affordable Care Act may affect you in regards to your health insurance for 2014 and whether or not you may qualify for help with paying for insurance. It will also list how the Affordable Care Act will affect your 2014 Federal income tax return.

What to expect in 2013

Requirement to Have Health Insurance Coverage beginning in 2014

Health Insurance Premium Assistance Subsidy

Premium Tax Credit

State Affordable Insurance Exchange

Useful Links for More Information on the Affordable Care Act


What to Expect in 2013
State Exchange Open Enrollment
The open enrollment period for signing up for health insurance through a State Affordable Insurance Exchange (Exchange) for 2014 will begin on October 1, 2013 and last through February 2014.

Communication from Employer to All Employees
Currently employed individuals will receive a notice from their employer in early 2013 that will inform them about the following:

  • The existence of their State’s Exchange including the services it provides and how to contact it.
  • Additional information regarding their options if their employer plan does not meet the minimum value requirements.
  • A notice that the employee may lose any employer contribution to any health benefits plan offered by their employer if the employee purchases a plan through an Exchange.

Requirement to Have Health Insurance Coverage
Beginning in 2014

The bottom line is that beginning in 2014 everyone (with some exceptions) will be required to obtain and maintain a minimum level of health insurance for themselves and their family.

When 2014 begins, if an individual has insurance coverage from their employer, you will not need to do anything.

If an individual does not have health insurance coverage, they will need to:

  • Obtain insurance by January 1, 2014 or you may have to pay a penalty when you file your 2014 Federal income tax return.
  • Sign up with the Affordable Insurance Exchange in your State to purchase health insurance for 2014.
  • Have the State Exchange determine whether they are eligible to receive assistance in paying for their 2014 health insurance premiums. This premium assistance subsidy will be available to individuals with income between 100% and 400% of the Federal poverty level ($22,350 - $89,400 for a family of four).

Read more information about the Penalty for not having health insurance and individuals who are exempt from the requirement to have health insurance.

Health Insurance Premium Assistance Subsidy
Under the Affordable Care Act any individual that purchases their health insurance through a State Affordable Insurance Exchange (Exchange) may be eligible for a premium assistance subsidy. This subsidy is available to individuals with income between 100% and 400% of the Federal poverty level and is paid directly to the insurance company.

Based on the income that was reported on an individual’s 2012 Federal income tax return and family size, the Exchange will determine what the subsidy amount will be as follows:

  • Calculate amount of the premium the individual will have to pay (expected contribution)
  • Determine what the total premium is for the Exchange’s second lowest cost (silver) level of coverage (benchmark plan)
  • The subsidy amount is the difference between the “benchmark plan” premium and the individual’s “expected contribution”

Read more about the Premium Assistance Subsidy.

Premium Tax Credit
This credit will be figured on the individual’s 2014 Federal income tax return and is based on the income reported on that return. The calculated credit will then be compared to the subsidy amount the individual received in 2014 to determine whether the individual will receive a refundable credit or have to pay an additional tax.

The taxpayer will receive a refundable credit if the premium tax credit is greater than their subsidy amount.

The taxpayer will owe additional tax if the premium tax credit is less than their subsidy amount.

Read more about the Premium Tax Credit.

State Affordable Insurance Exchange
An Exchange is a centralized marketplace that will offer individuals a choice of affordable health insurance plans for each State.

The Exchange will also be the place where individuals go to:

  • Check to see if they are eligible for a premium assistance subsidy to help pay for their health insurance premiums
  • Get answers to questions about health care coverage
  • See if they may be eligible for public health insurance such as Medicaid
  • Enroll in a health insurance plan  

Useful Links for More Information on the Affordable Care Act

Training Video

TY 2013 Federal Tax Law Updates

Click on the button below to view a video presentation of the Federal Tax Law Updates that affect TY 2013.

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