Taxes and Health Insurance

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Confused about how your health insurance affects your taxes? You’re not alone. Because the Affordable Care Act is still fairly new, many are not familiar with all the rules and regulations. Here is the information you need to know.

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 parent's 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


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

Tax season ends on April 18th, 2016 so make sure to get yours done in time. To avoid paying penalties on 2016 taxes, check to see if you qualify for a special enrollment.


By: Alecia Stanton

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