Healthcare & Taxes

What Is Affordable Care Act?

Advance Premium Tax Credit & Reconciliation

TAX CREDITS – The government provides financial help to lower the monthly cost of health insurance.  The tax credits is usually claimed when you file your tax return. If you are eligible for the Advance Premium Tax Credit, this tax credit is ADVANCED to the health insurance company on your behalf and applied directly to your monthly health insurance premium, to lower your monthly cost. This occurs throughout the year, before you file your tax return.

When you enroll in a Marketplace health insurance plan, you are asked to provide an estimate of your household income. This estimate, along with the number of people in your household, is used to determine your eligibility for the Advance Premium Tax Credit.  It’s also used to determine how much tax credit you receive. 

Understanding Reconciliation

If you and/or a member of your household receive the Advance Premium Tax Credit, the tax credit must be reconciled when you file your tax return. The Advance Premium Tax Credit amount that you received was based on an estimate of your household income and your expected family size. This reconciliation is done on form 1095-A.

If your actual income was less than what you estimated, you may get money back, which could increase your refund amount.  However, if your actual income was more than what you estimated, you may need to repay some of your Advance Premium Tax Credit, which could reduce your refund amount. The credit could also be affected by changes in your family size.

Let One Stop Tax Professionals who are ACA Specialists HELP you prepare your taxes.

Penalties & Exemptions

ACA Tax Penalties

The ACA now requires almost everyone to have health insurance. However, some people may choose not to enroll in health insurance. If you choose not to enroll there may be consequences in the form of a tax penalty, unless you qualify for an exemption. A penalty could mean your refund might be reduced, or you could pay more if you owe taxes at the end of the year.

The penalty in 2014 is calculated one of two ways. If you or members of your household don't have insurance that qualifies as minimum essential coverage you'll pay whichever of these amounts is higher:

Flat Fee Penalty




Percentage Penalty


1% of your annual household income


2% of your annual household income


2.5% of your annual household income


Exemptions are based on factors such as financial hardships, religious affiliations, and gaps in coverage – just to name a few. Depending on your circumstances, you may qualify for an exemption to either lower your tax penalty or eliminate it altogether. An exemptions can be claimed on your tax return; however, you may need to apply for some exemptions and get Marketplace approval.

Tax Return Exemption

Market Place Exemptions

Financial Hardships such as Homelessness, Unpaid medical, eviction, bankruptcy etc

Medical Hardships such as received a health plan cancellation notice, unaffordable coverage options, dependent children without insurance, denied medicaid etc

Personal Hardships an individual caring for an ill , disabled or aging family member, experienced a death of a close family member, victim of domestic violence, experienced hardships in obtaining health insurance etc