The Affordable Care Act: What You Need to Know to File Your 2014 Taxes

Tax Form with Stethoscope

— Istotockphoto

The Affordable Care Act, the nation’s new health care law that went into effect at the beginning of 2014, requires most Americans to have health coverage. This year, when you file your federal income tax, you will have to show that you and every member of your family has the minimum amount of health insurance required by the new law. This article will tell you what documents you should gather before completing your tax return.

Related: Tax-friendly states, see how yours measures up

In order to encourage those not previously covered to obtain health insurance, the law imposes a tax on individuals not carrying a certain minimum amount of health care coverage, known as Minimum Essential Coverage (MEC). That tax is payable with your 2014 federal income tax return. To avoid this payment, your tax return must indicate that you are sufficiently covered.

See Also: Learn more about the basics of the Health Care Law

Most people have enough health insurance to meet the minimum requirement and will not have to make the additional payment with their 2014 taxes. You are in compliance with the Affordable Care Act (ACA) if you are covered by:

  • Medicare, Medicaid, TRICARE, veterans or other coverage
  • An employer-based health insurance plan
  • Individual health insurance such as that purchased through the Health Insurance Marketplace/Exchange or the Small Business Health Options Program

Also, you will not have to pay the additional tax if:

  • You have an exemption granted by the IRS or the Marketplace/Exchange
  • Your minimum health insurance premium is more than 8 percent of your household income
  • You have a gap in coverage of less than three months
  • You are exempt because of your religious beliefs, because you are a Native American or Alaska Native, because you have experienced a hardship (considered on a case-by-case basis), or for several other reasons (check the irs.gov website for specifics)

Get more information about preparing and filing your taxes from AARP

If you are using a tax preparer or are able to take advantage of free filing assistance from AARP Foundation Tax-Aide, be sure to bring relevant documents with you to prove you are in compliance with the ACA. You will need one of the following:

  • Documentation proving health care coverage for you, your spouse and all your dependents
  • Information indicating that you were covered for at least nine months of the year
  • Form 1095-A (which you will receive by Jan. 31, 2015) if you purchased insurance through the Marketplace/Exchange
  • Documentation of a Health Care Exemption received from the IRS or the Marketplace/Exchange

If you were not in compliance, you will have to pay the additional tax, known as a Shared Responsibility Payment (SRP). For 2014, the SRP is the greater of:

  • 1 percent of your household income above the tax return threshold for your filing status, or
  • A flat dollar amount of $95 per adult and $47.50 per child, to a maximum of $285

Your tax preparer will help you calculate the SRP if that payment is necessary.

For more information, visit healthcare.gov or www.irs.gov/aca.


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