Reminder – Affordable Care Act for Tax Year 2017 Returns

Congress was unable to pass legislation to repeal and replace the Affordable Care Act. This means that the Affordable Care Act provisions in the tax code remain in effect for 2017 federal tax returns.

Also, although the penalty provision was repealed in the recently passed federal tax legislation, the repeal does not go into effect until 2019.

Therefore, as we approach the beginning of the 2018 filing season here are some reminders about the Form 1095-A, exemptions from the requirement to have health insurance and the what the individual penalty (individual shared responsibility payment) amount is for 2017 federal income tax returns.

Individual Penalty (Shared Responsibility Payment) for 2017
If it is determined that an individual does owe a penalty for 2017, it is calculated as the greater of: 

• 2.5% of the individual’s income that exceeds their 2017 filing threshold (personal exemptions plus standard deduction for their filing status):

Or

• A flat dollar amount that is assessed for the taxpayer, spouse, and dependents as follows:
  • $695 for taxpayer, spouse, and dependents over age 18
  • $347.50.50 for each dependent under age 18
  The maximum family flat dollar amount for 2017 is $2,085

The penalty amount is limited to the annual national average premium for a bronze level health plan available through the Marketplace which is $3,264 per individual ($272 per month per individual) with a cap of $16,320 for a family with five or more members ($1,360 per month).

See pages 15 - 19 of the 2017 Form 8965 instructions for more information on how the penalty is calculated.

Importance of Form 1095-A 
The Form 1095-A (Health Insurance Marketplace Statement) will be received by the approximately 10 million individuals that obtained their 2017 health insurance at the Federal or a State Marketplace.

This form is needed by these taxpayers in order to complete the 2017 Form 8962 (Premium Tax Credit) which calculates their premium tax credit for 2017 and, for those who received a subsidy, it also performs the reconciliation of the subsidy with the calculated credit.

Also, as a reminder any taxpayer that received a subsidy must complete the Form 8962 and include it with their 2017 federal return. If it is not included with the original federal return the processing of the return will be delayed.

The 1095-A should be received:

• For those who used the Federal Marketplace – throughout January but no later than January 31, 2018
• For those who used a State Marketplace – no later than early February, 2018

A copy of the Form 1095-A will be available online for those who used the Federal Marketplace via their account on healthcare.gov in January. It may also be available online for those who used a State Marketplace.

Health Care Coverage Exemptions
Most individuals who did not have health insurance for all or part of 2017 probably qualified for an exemption. Therefore, it is important that before any penalty is calculated that an individual determines whether they may qualify for a health care coverage exemption.

If an individual qualifies for a health care coverage exemption they must complete the applicable parts of the 2017 Form 8965 (Health Coverage Exemptions) and include it with their 2017 federal return.

If an individual needs help in determining whether they qualify and for which exemption a Find Exemptions tool is available on the healthcare.gov website.