Health Care

You may be eligible to claim the premium tax credit on your 2016 tax credit if you, your spouse, or a dependent enrolled in health insurance through a Health Insurance Marketplace and your household income falls within specific criteria.
The credit provides financial assistance to pay the premiums by reducing the amount you owe or increasing your refund amount.
If the marketplace overestimated your income when they calculated your advance payment then you will probably receive a refund. If the marketplace underestimated your income then you will have to repay a portion of the advance payment. The premium tax credit will be reported on IRS Form 8962. Both the credit or additional tax due transfer to Form 1040.

If you do not have health insurance coverage for all 12 months in 2016 you may have to make a penalty payment with your tax return unless certain other conditions exist.
Individuals for whom coverage is too expensive are exempt from the penalty payment. Also individuals may qualify for a coverage exemption. A coverage exemption can be granted from your marketplace or you may qualify for a coverage exemption based on your household income or gross income being below certain threshold amounts.
Individuals may also qualify for certain hardship coverage exemptions based on their family circumstances. The Shared Responsibility Penalty Payment will be reported on Form 1040, line 61. The coverage exemptions being claimed are reported on new IRS Form 8965.

If the marketplace underestimated your income when calculating your advance payment and you do not claim any health coverage exemptions then you will probably have to repay a portion of the advance payment. The premium tax credit will be reported on new IRS Form 8962.
Other factors that can cause a penalty calculation is that you received a advanced payment and your filing status is married filing separately or as a dependent of another or your household income is above or below certain limits.

If you or a family member enrolled in health insurance coverage through a health insurance marketplace, the marketplace must issue a Form 1095-A.
This form provides the required information on a monthly or annual basis to complete IRS Form 8962.
Form 8962 is used to calculate a Premium Tax Credit or a Repayment on your current year's tax return.
The marketplace has also reported this information to the IRS.

Wages are subject to a 2.9% Medicare payroll tax with the employee and employer each paying half (1.45%). There is no limit to the amount of wages that are subject to the Medicare tax. Self-employed individuals pay both halves.
Beginning in 2013, there is an additional 0.9% (2.35% in total) Medicare tax that applies to wages received in excess of $250,000 for joint filers, $200,000 for single filers and $125,000 for Married filing separate filers.
This additional tax will be filed on new IRS Form 8959 which will transfer to Form 1040 Line 60.

The 2016 penalty is the greater of: $695 per year ($2,085 maximum per family), or 2.5% of household income.
There was no penalty in 2013. The penalty is phased in over time. Beginning in 2014, U.S. citizens and legal residents must carry health insurance or be subject to a penalty.
The 2014 penalty was the greater of: $95 per year ($2,085 maximum per family), or 1.% of household income.
The 2015 penalty was the greater of: $325 per year ($2,085 maximum per family), or 2.% of household income.

Individuals will need to carry health insurance beginning in 2014 unless they meet an exception: Exemptions will be granted for: Individuals with income below the tax filing threshold ($9,750 single; $19,500 married filing joint), Individuals whose lowest cost plan option exceeds 8% of household income, those claiming financial hardship or claiming religious objections.
Individuals without coverage for less than 3 months and Aliens not lawfully present in the United States or American Indians or Incarcerated individuals.

1- Health Insurance Marketplace referred to as a health exchange. it began in 2014, this program helps a person find health insurance that fits their budget. The exchange is run by the state or federal government and it results in a private insurance policy.
2- Job-based coverage is when employer offers health insurance coverage. You may be eligible to receive it, including your spouse or dependents. Employers may decline coverage for certain reasons such as for part-time workers, but not for health related reasons.
3- Medicaid: Each state offers Medicaid for lower income people or for the elderly or people with disabilities.
4- Private policy: these health plans will cost the same whether acquired directly or through an insurance exchange. Subsidies will apply only if you are using an insurance exchange.

There is no government run insurance plan or single payer system established under the Affordable Care Act. The government will only run the health care exchanges and the insurance industry will still be run by private companies.
Public exchanges will be available in all 50 states and 4 levels of health care insurance will be offered. They are platinum, gold, silver and bronze. Each insurance plan will offer the “minimum essential coverage”, which is needed to avoid paying a penalty. Private exchanges will be available as an alternative to the public exchanges.