Tax season is upon us! While filing your taxes can be stressful, it doesn’t have to be. Doing your taxes when you have an Affordable Care Act (ACA) compliant healthcare plan doesn’t need to cause you to worry.
When you file your taxes, you will need to provide information about your health insurance. You will need to include your 1095-A form, which is your Health Insurance Marketplace Statement. This form will show the months you had coverage and the amount of premium tax credit you received.
Here are a few things to keep in mind when it comes to filing your taxes with ACA insurance.
What Documentation Do I Need?
Filing taxes can be a confusing and daunting task, especially when you have health insurance through the Affordable Care Act. But don’t worry, we’re here to help! Here are a few things you need to know to file your taxes correctly when you have marketplace insurance.
Regardless of whether you get health insurance through your employer or the ACA, you will receive documentation in the mail to use when you file your taxes.
First, you’ll need to gather all of the necessary documents. This includes your 1095-A form, which is your Health Insurance Marketplace Statement. You’ll also need your tax return from last year as well as any other relevant financial documents.
Next, you’ll need to input all of your information into the appropriate forms. The 1095-A form will go into Form 8962, which is used to figure out any premium tax credits that you may be eligible for.
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Did You Get a Premium Tax Credit?
If you or any of the members of your tax household are covered by ACA insurance that you received premium tax credits for, you will need to complete specific forms as part of your federal income tax return.
If you qualified for and used premium tax credits, you will need to complete Form 8962 with your tax return. You will complete this when you fill out Form 1095-A, which provides information about your health insurance coverage.
You will receive Form 1095-A via U.S. mail in early 2023 for the 2022 tax year.
It is best to wait to file your income taxes until you have received this form. You will use this form to reconcile the premium tax credits for your 2022 filing.
Didn’t Receive Premium Tax Credits?
If you did not receive premium tax credits for your ACA health plan in 2022, but qualified for them, you may be eligible to claim them as tax credits on your federal income tax return.
Whether you received tax credits or not, wait until you receive Form 1095-A to file your taxes. Doing so will help you reconcile any premium tax credits that you received or that are owed back to you via a refund.
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Will I Get a Tax Refund if I Have an ACA Plan?
You may get a tax refund if you have an ACA plan, but it depends on a number of things.
- If you qualified for premium tax credits and chose to use them to lower your monthly premiums, you will reconcile those credits on Form 8962 with information from Form 1095-A.
- If the amount is less than the actual premium tax credit, you will get the difference back as a higher refund or lower tax due on your return.
- If the premium tax credits applied to your premiums were more than the actual credit, you may need to pay the difference as part of your tax return.
Will Having a Health Savings Account Affect My Tax Return?
A Health Savings Account (HSA) is a special kind of savings account where pre-tax dollars are set aside for qualified medical expenses.
All contributions to an HSA are in pre-tax dollars. Any earnings, if invested, are tax-free.
If you qualify for a high-deductible plan, even an ACA plan, you are eligible to open an HSA. High-deductible plans typically cover only preventive care services before the deductible is met.
Money in an HSA can be used for deductibles, copays, coinsurance, and some other expenses. Because these dollars are not taxed, having an HSA can save money for people with high deductible plans.
Taxes & HSAs
The money that you put into an HSA is yours to keep, without any deadlines attached. The pre-tax dollars that you put into your HSA can be invested and continue to grow tax-deferred, similar to a 401k.
If you want to use the money in your HSA, the money will remain tax-free when used for any qualified medical expenses. If you are under the age of 65 and use the money for other purposes, that money will become taxable income.
After turning 65, you can use HSA money for anything, but you will need to pay taxes on any withdrawals that are not used for qualified medical expenses.
Get Ready to File Your Taxes
Tax season is here! Remember that filing your taxes is an important part of having health insurance, and we recommend waiting until you receive Form 1095-A before filing.
If you have any questions, call our insurance professionals at McKnight & McKnight Insurance, and we can walk you through what you need to know about reconciling any tax credits from 2022.