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The Real Obamacare: Will the ACA Help or Hurt You at Tax Time?

The Real Obamacare: Will the ACA Help or Hurt You at Tax Time?


As with everything involving our government and the IRS, it depends. Let’s look at the different scenarios.

real obamacareYou Didn’t Have Health Insurance in 2014

If you didn’t buy ACA-compliant health insurance or have a grandfathered plan in place for at least nine months of 2014, you will owe a penalty as part of your federal tax return. The penalties are $95 per adult plus $47.50 per child up to a maximum of $285 per family, OR 1 percent of your modified adjusted gross income—the federal filing threshold. (Modified Adjust Gross Income (MAGI) is your adjusted gross income, typically line 37 on your tax return, plus any tax-exempt Social Security benefits, tax-exempt interest and tax-exempt foreign income.)

You Purchased Off-Exchange or Employer-Sponsored Health Insurance

  • Let’s say you had some other ACA-compliant health insurance or a grandfathered plan for at least nine months in 2014. The Affordable Care Act (ACA) will have no effect on your federal taxes.
  • If your income falls within the range that would qualify you for a subsidy, you are not eligible to receive a tax refund when you file your 2014 taxes. To qualify for a subsidy, you must apply through an exchange and purchase a product that is listed on the exchange. The premium tax credits can then be taken monthly and applied toward your monthly health premium or delayed until you file your taxes for the year, at which time you would receive a tax refund in the amount of your total premium tax credit.

You Purchased On-Exchange Health Insurance

Table 1 – Premium Tax Credit Repayment Caps

2014 MAGI* as % of Federal Poverty Line

Single Filers CAP

Married Filers CAP
Less  than 200%



At least 200% ‐less than 300%



At least 300% ‐less than 400%



400% or more



  • If you made less than the amount you projected for 2014, and you had ACA-compliant health insurance that you purchased through an exchange for at least nine months in 2014, you get a tax refund.
  • If you made more than what you projected in 2014, you will owe some additional taxes, but a cap has been set so that you won’t have to pay back all of the excess subsidy unless your modified adjusted gross income is more than 400 percent of the 2014 Federal Poverty Line.
  • If you projected an income in excess of 100 percent of the FPL and received a subsidy, but then experienced changes in your income such that you did not make 100 percent of the FPL, the IRS has announced they will not seek restitution of the premium tax credits extended to you. No repayment will be required.

As always, check with your accountant or CPA regarding the specifics of your situation.

Greg Howard

Written by

Greg Howard is a licensed health insurance broker, a regional manager for USA Benefits Group and a federally certified Affordable Care Act specialist. You can reach Greg at info@ACAMadeEasy.com or toll free at 1-888-427-3270. Or visit www.acamadeeasy.com.

Categories: Health


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