5 Tips for Tax Filing When You Have ACA/Marketplace Health Insurance
Are you planning to enroll in a health insurance plan sold through the Affordable Care Act Health Insurance Marketplace? Before you get started, it’s important to understand how the Premium Tax Credit (PTC) could affect your enrollment.
The PTC is a refundable tax credit that can help you pay the premium for health insurance sold in the ACA Health Insurance Marketplace. To get this credit and apply for your preferred health insurance, you must meet certain requirements and file a tax return with Form 8962, Premium Tax Credit.
The trouble is that with so many options and types of information available, navigating the Health Insurance Marketplace can be challenging. Here are some tips and tricks to help you make the most of your PTC and the ACA Health Insurance Marketplace.
1. If your circumstances change, let the marketplace know as quickly as possible.
Undocumented changes to your enrollment status can disrupt the amount of money you receive from the PTC, which can impact your ability to enroll in an insurance plan.
The three factors determining the amount of money you receive from the Premium Tax Credit are:
- The people in your family
- Your household income
- If you’re eligible for other non-marketplace insurance
It matters that you report these changes because it can impact how much money you pay out of pocket for health insurance. For example, if you don’t update the marketplace and receive more money than needed from the PTC, you will be required to repay that money when you next file your taxes. On the other hand, if you don’t report changes, you could end up making larger monthly payments on your health insurance than you actually should.
2. Keep your current address up to date with the marketplace.
After the year is over, you’ll be sent Form 1095-A, Health Insurance Marketplace Statement. It’s important that your address on file is up to date so you receive this statement and use it when filing your next tax return to complete Form 8962, Premium Tax Credit.
3. You must include the information from Form 1095-A in your tax return filing on Form 8962.
Form 8962 is used to adjust the advance payments you’ve received from the PTC to what they should have been based on your circumstances. If you don’t update your information (see tip #1 for more information about this), you could end up owing taxes or receive a smaller refund when you file your tax return. Additionally, if you file your tax return without Form 1095-A included, this could delay processing on your tax return.
Information on how to handle a rejected tax return for missing Form 8962 information can be found here.
4. You aren’t required to accept advance payments of the Premium Tax Credit.
With the PTC, you can request to receive the entire credit up front or you can pay your health insurance premium on your own and receive the PTC after you file your tax return. There’s no right choice: it just depends on when you want to receive the Premium Tax Credit.
5. Every taxpayer covered by Healthcare Marketplace Insurance needs to include 1095-A information and Form 8962 on their tax return.
Keep in mind that this may apply to dependents who file tax returns too. Whether you’re a college student who’s part of your parent’s Marketplace Insurance or you and your spouse file separately, it’s important that every individual includes their 1095-A information and Form 8962 in their tax return. Additionally, you should speak with any family members who share the same healthcare plan with you and determine what your policy allocations and coverage percentages are.
Enrolling in the right insurance with the right financial coverage takes time, energy, and lots of research. As you navigate this process, remember: you’re not alone. The SaverLife member community is here to support you at every step of the financial health journey.
Drop a question or comment into our forum to connect with other tax filers who might just be going through the same experiences you are.