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How health care reforms affect your taxes?

September 11, 2014  |   Tax Advice   |   Tags: , ,  

With the Supreme Court’s ruling on the Affordable Care Act, commonly known as Obamacare, many wonder how the new healthcare laws will affect them. The Affordable Care Act is bringing about a significant change in how health insurance coverage is treated under law, not the least of which is the tax implications.

health care reforms

Some changes to tax credits and medical accounts have already gone into effect, and Americans will continue to see more changes over time. The revisions are gradual and stretch out over many years to allow people time to adjust and prepare.

This year, 2014, is when the healthcare reform law will truly be enforced and is when the major changes to your healthcare plan will begin. All Americans are now required to maintain health insurance. If you are not covered by any employer plan, or by Medicare or Medicaid, you’ll have to purchase your own coverage from a market exchange or qualify for an exemption.

The IRS is responsible for enforcing the new laws. They accomplish this by requiring you to report the value of your health plan with your tax return. If you do not have health insurance coverage, you may have to pay a fee called the Individual Responsibility Payment.

For fiscal year 2014, we will see a new number on the W-2 form. This will be how employers report the value of your health plan to the IRS. This key figure will determine whether you’re eligible for tax credits or liable for tax penalties.

Remember, health plans are not income. You do not have to list them as income on your return and they are not taxable.

The Affordable Care Act is bringing about major changes to American life and affects every taxpayer, whether they agree with the law or not.