by Allie Broas, Program and Administrative Assistant
Tax season is upon us and April 15 will be here before you know it. For those enrolled in health insurance through Connect for Health Colorado, it means you should be receiving a Form 1095-A, the Health Insurance Marketplace Statement, in the mail to verify coverage and help you correctly file your Premium Tax Credit Form 8962. If you received tax credits for reduced monthly premiums, you will need to file Form 8962 with your taxes.*
With a few exceptions, everyone without health insurance for three months or more in 2014 will pay a penalty when filing their taxes. There are many possible exemptions you can qualify for. Think you might qualify for one of these exemptions? Use this tool and, if one or more applies to you, fill out Form 8965 to claim your exemption from this penalty.
Form 1095-A will help you report your health insurance coverage and any financial assistance you may have received last year, whether in the form of lowered monthly premiums or a year-end tax credit when you file your 2014 tax return. Either way, you must file a federal income tax return if you or another member of your household received any financial assistance.
If you made more money than expected last year, you might be required to payback some of the subsidies you received to help offset the cost of your monthly premiums. If you had any change in your family, such as a new baby, your final tax credit could be different as well. While these changes might mean you owe back a portion of the subsidies provided to you, being proactive about reporting your income and life changes to Connect for Health Colorado can save you from similar headaches in the future. Keep this in mind, especially if your income changes month to month.
When filing Form 8962, you will be asked to report your Modified Adjusted Gross Income (MAGI), as well as your dependents’ MAGI. When figuring out how much cost assistance you were eligible for in 2014, you used your projected MAGI for the year, and you will have to use it again to determine the amount on your year-end taxes. Unless you underwent any major life changes that would affect your income, your MAGI should be the same when you first applied for cost assistance. To figure out your or your dependents’ MAGI, you can refer to page 4 on the IRS instructions for Form 8962: http://www.irs.gov/pub/irs-pdf/i8962.pdf
We know this process is new and a bit overwhelming, but the tax system now plays an important role in making health insurance coverage more affordable. While the new additions to the process can be complex, there is good news: help is available! Our new resource page on tax filing is one of the many resources available online to help you file your taxes. If you continue to have questions when filing, you can call the IRS toll-free number at 800) 829-1040.
* If you were enrolled in Medicaid, or received coverage outside of Connect for Health Colorado, you will not receive Form 1095-A.
Please note: The blog is for general information purposes only and should not be relied on as legal or tax advice. Please contact a tax or legal professional for any specific questions you may have.