New tax credits cut the cost of health insurance
Help for lower- and middle-income families.
Tax credits will help lower and middle income families by cutting the cost of health insurance. The Affordable Care Act mandates that most people are insured either through their employer or by purchasing their own policy. Beginning in October 2013, options were available through a Health Insurance Marketplace in every state for purchasing insurance. The Marketplace enrollment for 2014 coverage continues until March 31, 2014.
If you qualify, the Health Premium Tax Credit will reduce the total amount of tax you owe the IRS. You can get the tax credit to help cut the cost of your health insurance. If you do not owe, you can get a bigger refund.
To get the tax credit, you must buy your health insurance from the Health Insurance Marketplace, 1-800-318-2596 or www.healthcare.gov. You do not qualify if your employer offers health insurance or if you receive Medicare. Your family’s yearly income must be below $45,960 for one person or $94,200 for four persons. Visit the Health Insurance Marketplace for more details. If your income is near these amounts, you may still qualify.
You have two options for taking the Tax Credit: take it now or take it later.
If you want it now, you will have a lower health care premium each month. When you sign up for health insurance at www.healthcare.gov tell them you want the tax credit “in advance”. You can choose to take all of your credit in advance or just part of it. During 2014, you will pay a lower premium each month. In early 2015, you will receive a statement from your Health insurance Marketplace Plan showing how much tax credit you received in 2014, to include when you file your 2014 taxes.
Sometimes life changes during a year. If you choose to take the tax credits in advance and you have changes to your family size (get married, divorced, have a baby) or income (get a raise, lose your job, reduced salary) during 2014, you could be getting the wrong amount of tax credit. As soon as one of these changes occur, call 1-800-318-2596 to be sure you are getting the right amount.
If you want the tax credit later, the advantage is you will lower the amount you pay at tax time. Sign up for health insurance at www.healthcare.gov and pay the full premium each month in 2014 for your coverage. In early 2015, file your 2014 taxes and subtract your tax credit from the tax you owe, or get a bigger refund if you do not owe anything. Consumers Union prepared a fact sheet to help you understand tax credits and decide financially your best option to take it now or take it later, and two online calculators may help consumers estimate the cost of their health insurance premium as you comparison shop different health insurance plans.
For more answers to your questions about health insurance, go to healthcare.gov Q&A or the Health Insurance FAQs - eXtension. Also see previous news articles about health insurance choices at the Michigan State University Extension website. Find out about Smart Choice: Health Insurance workshops and factual information on the Affordable Care Act Roadmap.