How the Affordable Care Act Will Affect Individual Taxpayers in 2015
In our July newsletter, we discussed how the Affordable Care Act (ACA) will affect employers during 2015. This month’s newsletter highlights some of the major aspects of the ACA that affect individual taxpayers.
All U.S. citizens and legal residents are now required to obtain health coverage for themselves and household members, or pay a penalty tax. The law provides for five levels of health coverage – bronze, silver, gold, platinum and catastrophic – with bronze representing the minimum allowable level of coverage. A household member is any person that can be claimed as a dependent by the taxpayer, regardless of whether the person is actually claimed. Also, certain individuals are exempt from the requirement, including those on Medicare and those who cannot afford health coverage (where their insurance premiums would exceed 8% of household income). The 2015 penalty for failure to obtain health coverage is the greater of $325 per household member ($975 per family) of 2% of household income. The penalty, if any, is reported annually on the taxpayer’s personal federal income tax return. Those who obtain full-year health coverage through their employer are generally exempt from these penalties.
Persons who do not obtain their health coverage through their employer may be eligible to purchase their insurance through Covered California, and may qualify to receive assistance for health insurance premiums. For 2015, individual taxpayers would qualify for assistance if their household income is between $11,770 and $47,080. A family of four would qualify if the household income is between $24,250 and $97,000. The assistance comes in the form of a “premium tax credit” taken on the individual’s personal income tax return. Individuals with household income below $16,243 (or $33,465 for a family of 4) would be eligible for Medi-Cal and would not qualify for assistance.
Please contact your WNDE professional if you have any questions regarding these rules.