The following information will, hopefully, help you better understand the new Affordable Care Act and how it affects you and your taxes.

How the Health Care Mandate Works

The first thing you need to know about the Affordable Care Act is that, as of 2014, you either need to keep your current plan or obtain health insurance (called minimum essential coverage) and maintain it throughout each year. If you don't, you will need to get an exemption or pay a "shared responsibility" fee on your year end Federal taxes for each month you go without coverage. For those who can afford it and choose not to purchase health insurance the fine will be unavoidable.

To file your federal taxes, you will need to bring your (new) Form 1095-(A, B or C) with you. It is a requirement for these forms to be mailed to you by January 31. The Form 1095-A will be received by those who obtained insurance from the HealthCare Marketplace (the Exchange). For the 2016 tax year, Forms 1095-B (from private insurance) and 1095-C (from employer-provided insurance) are still not required to be sent. Therefore, you need to provide your tax preparer with another form of proof of coverage. If you had an exemption for any months you will need to provide your ECN number provided by the Health Insurance Marketplace.

Individual Mandate

The law that requires every American to have insurance.

Minimum Essential Coverage

The type of coverage you'll need to avoid the fee for not having insurance. In order to be in compliance with the law you must maintain minimum essential coverage throughout the year, get an exemption, or pay a fee for each month you go without it. (There is an exception where you are allowed up to three months in a row each year without coverage, due to a coverage gap exemption.)

Exemption (from the fine)

Those who choose not to purchase insurance will have to pay a tax "penalty" unless they qualify for an exemption. Exemptions from ObamaCare's tax "penalty" mandate are available to a number of Americans. For hardship exemptions, you should apply early, you need to get approved first and then wait for confirmation to be mailed to you.  You’ll get an unique exemption certificate number (ECN) which will be used to confirm exemption when filing your taxes.

Individual Shared Responsibly Payment

A fancy name for the fee, penalty, or fine assessed for failing to obtain and maintain mimimum essential coverage throughout the year (or obtaining and exemption). This fee is a calculation based on the number of months you, and/or your dependent, go without coverage.

Premium Assistance/Subsidies

Health care subsidies can save you money on your premium and out-of-pocket expenses. Affordable Care Act subsidies are only available through the Marketplace (the Exchange). Premium subsidies are reconciled at tax time and may result in either an additional tax refund or, more likely, repayment of the having received too much subsidy (overpayment by the Federal Government on your behalf) in the form of additional tax to you.

Minimum Essential Coverage

Minimum essential coverage includes the following types of health insurance:

• Employer-sponsored coverage (including COBRA coverage and retiree coverage)
• Coverage purchased in the Individual Market, including a qualified health plan offered by the Health Insurance Marketplace (also known as an Affordable Insurance Exchange)
• Medicare Part A coverage and Medicare Advantage plans
• Most Medicaid coverage
• Children's Health Insurance Program (CHIP) coverage
• Certain types of veterans health coverage administered by the Veterans Administration
• TRICARE
• Coverage provided to Peace Corps volunteers
• Coverage under the Non-appropriated Fund Health Benefit Program
• Refugee Medical Assistance supported by the Administration for Children and Families
• Self-funded health coverage offered to students by universities for plan or policy years that begin on or before Dec. 31, 2014 (for later plan or policy years, sponsors of these programs may apply to HHS to be recognized as minimum essential coverage)
• State high risk pools for plan or policy years that begin on or before Dec. 31, 2014 (for later plan or policy years, sponsors of these program may apply to HHS to be recognized as minimum essential coverage)

Minimum essential coverage does not include coverage providing only limited benefits, such as coverage only for vision care or dental care, and Medicaid covering only certain benefits such as family planning, workers' compensation, or disability policies.

The following types of health insurance are not, by themselves, minimum essential coverage:

• Short Term Health Plans
• Fixed Benefit Health Plans
• Supplemental Medicare like Part D and Medigap
• Some Medicaid covering only certain benefits
• Vision only, Dental only, and limited benefit plans
• Grandfathered Plans (You will avoid the fee, but won't get the new rights and protections)

Exemptions

The mandate's exemptions cover a variety of people including: members of certain religious groups and Native American tribes, undocumented immigrants (who are not eligible for health insurance subsidies under the law), incarcerated individuals, people whose incomes are so low they don't have to file taxes (in 2016, it's $10,350 for an individual or $20,700 for a married couple), people for whom health insurance is considered unaffordable (where insurance premiums after employer contributions or federal subsidies exceed limits of family income), and those going without insurance for less than three months in a row.

If you plan on applying for an exemption, don't leave it to the last minute. In most cases, you'll have to fill out a form and wait for confirmation before you can report the exemption. In addition, many exemptions require certain documentation to verify you qualify. Obtaining that documentation also takes time. Waiting can mean a delay of your Federal Tax Refund.

• Apply for exemptions at HealthCare.gov.
• There are about 20 different exemptions, including hardship exemptions. Some exemptions require documentation, some don't.
• Many exemptions require an Electronic Confirmation Number (ECN).
• Some exemptions only last 3 months, others last a calendar year.
• Some exemptions will qualify you for a catastrophic health plan and/or a special enrollment period, some will just help you avoid the fee.

If you belong to any of the groups listed below you are exempt from the Individual Mandate to obtain minimum essential coverage:

• Unaffordable Coverage Options - People who would have to pay more than 8% of their household income (MAGI) for the lowest priced Marketplace Health Insurance after subsidies qualify for this exemption. or if employer insurance is unaffordable, costing more than 9.5% after employer contributions for self-only coverage, you will likely quality for this exemption. You must apply for this exemption. Remember that your MAGI is not your taxable income; it includes the amounts you invested into non-taxable savings accounts, income from Social Security, and educational expenses.
• Low Income/No Filing Requirement - People with incomes below the IRS threshold required for filing taxes (in 2013, $10,000 for a single person and $20,000 for a married couple) are exempt. This exemption is automatic.
• Hardship Exemption - The Health Insurance Marketplace (the Exchange), has certified that you have suffered a hardship that makes you unable to obtain coverage either for financial or other reasons. There are many situations which will qualify you for a hardship exemption, (see below for the full list). Essentially, if you wanted to buy health insurance, but were unable because of a hardship, you qualify. All you need to do is apply and provide documentation of your hardship.
• Short Coverage Gap Exemption - If go without coverage for less than three consecutive months during the year you will not be responsible for the fee for those months. This allows people who don't have a plan, to sign up by the end of open enrollment (typically Feb 15th each year) and still be exempt from the fee. It also allows folks who have had coverage throughout the year, downtime between insurance options for when they experience a life change like moving or switching jobs.
• Religious Conscience - People can qualify for religious exemptions. The Social Security Administration administers the process for recognizing these sects according to the criteria in the law.
• Health Care Sharing Ministry - If you are a member of a recognized health care sharing ministry you qualify for an exemption.
• Not lawfully present - If you are an undocumented immigrant; you are not legally a U.S. citizen, a U.S. national, or an alien lawfully present in the U.S.
• Incarceration - People who are incarcerated are exempt.
• Indian tribes - Members of a federally recognized Indian tribe are exempt.

Hardship Exemptions

Hardship exemptions apply to those who have had certain life circumstances that qualify as "hardships". There are many things that will qualify you for a hardship, but in simple terms: If you wanted to buy health insurance and you were unable to because of a life circumstance or financial situation, than you most likely qualify for a hardship exemption.

If any of the following circumstances apply to you, you may qualify for a hardship exemption from paying the fine, and/or qualify for a catastrophic plan, and/or qualify for a special enrollment period. You will need to submit documentation to be granted an exemption in most cases.

Most hardship exemptions start the month before the hardship, the month of, and the month after. Some hardship exemptions and other non-hardship exemptions last the a full calendar year (typically, December 31st). This means that while some exemptions will help you avoid a few months of the per-month fee, most are meant to qualify you for special enrollment rather than to simply exempt you from the fee.

The following table lists Hardship Categories and Documentation needed to qualify:

Hardship number	Category	Submit this documentation with your application
1.	You were homeless.	None
2.	You were evicted in the past 6 months or were facing eviction or foreclosure.	Copy of eviction or foreclosure notice
3.	You received a shut-off notice from a utility company.	Copy of shut-off notice from a utility company
4.	You recently experienced domestic violence.	None
5.	You recently experienced the death of a close family member.	Copy of death certificate, copy of death notice from newspaper, or copy of other official notice of death
6.	You experienced a fire, flood, or other natural human-caused disaster that caused substantial damage to your property.	Copy of police or fire report, insurance claim, or other document from government agency, private entity, or news source documenting event
7.	You filed for bankruptcy in the last 6 months	Copy of bankruptcy filing
8.	You had medical expenses you couldn't pay in the last 24 months.	Copies of medical bills
9.	You experienced unexpected increases in necessary expenses due to caring for an ill, disabled, or aging family member.	Copies of receipts related to care
10.	You expect to claim a child as a tax dependent who's been denied coverage in Medicaid and the Children's Health Insurance Program (CHIP), and another person is required by court order to give medical support to the child.	Copy of medical support order AND copies of eligibility notices for Medicaid and CHIP showing that the child has been denied coverage
11.	As a result of an eligibility appeals decision, you're eligible either for:1) enrollment in a qualified health plan (QHP) through the Marketplace, 2) lower costs on your monthly premiums, or 3) cost-sharing reductions for a time period when you weren't enrolled in a QHP through the Marketplace.	Copy of notice of appeals decision
12.	You were determined ineligible for Medicaid because your state didn't expand eligibility for Medicaid under the Affordable Care Act.	Copy of notice of denial of eligibility for Medicaid
13.	You received a notice saying that your current health insurance plan is being cancelled, and you consider the other plans available unaffordable.	Copy of notice of cancellation
14.	You experienced another hardship in obtaining health insurance.	Please submit documentation if possible
NEED HELP WITH YOUR APPLICATION? Visit HealthCare.gov or them at 1-800-318-2596. Para obtener una copia de este formulario en Español, llame 1-800-318-2596. If you need help in a language other than English, call 1-800-318-2596 and tell the customer service representative the language you need at no cost to you. TTY users should call 1-855-889-4325.

Individual Shared Responsibly Payment (the fine)

The fee for not having insurance increases each year. If you decide not to get coverage, and don't qualify for an exemption, then you'll have to make an Individual Shared Responsibility payment on your income tax return for each month you went without minimum essential coverage.

In 2016, the Individual Shared Responsibility fee for not having insurance is $695 per adult and $347.50 per child (up to $2,085 for a family), or 2.5% of your taxable income, whichever is greater. If you had coverage some months during the year, the fee will be 1/12 of the total fee (excluding coverage gap exemptions) multiplied by the number of months you did not have coverage.

The IRS cannot enforce the Individual Shared Responsibility Provision with jail time, liens, or any other of typical methods of collection. The only way for the IRS to collect the fee for not having health insurance, if you choose not to pay it, is for them to withhold the money you would get back (in the form of a Tax Refund) after you file your income tax return.

Premium Assistance/Subsidies

A subsidy (premium assistance) lowers the amount you spend on your monthly premium (via advanced premium tax credits) or reduces your out-of-pocket costs for things like copays, coinsurance, deductibles and out-of-pocket maximum (cost sharing reduction). Subsidies are "subsidized" by the federal government and are paid for through taxes.

Subsidy eligibility is based on income for all legal residents in the US. However, anyone who has access to affordable employer based health insurance, is eligible for Medicare, or who falls in the "Medicaid gap" will not be able to get subsidies.

During open enrollment Americans making under 400% of the federal poverty level (FPL) can get a type of subsidy called advanced premium tax credits. Tax credits lower premium costs. Those making less than 250% FPL can get cost sharing reduction subsidies to lower out-of-pocket costs. Those making less than 138% FPL (in some States) may be eligible for Medicaid (which subsidizes both premiums and cost sharing). The best way to find out if you are eligible for a subsidy is to simply apply at the Marketplace (the Exchange). Applying doesn't lock you in to buying health insurance, but it will give you an idea of your options. You can apply for cost assistance before open enrollment, but you won't be able to enroll in a plan with those subsidies until each years annual open enrollment period.

If you qualify for advanced premium tax credits (subsidies), you can use them immediately to lower your monthly premium expense. You pick how much advanced tax credits that will apply each month towards your premium payment up to a maximum amount. If you choose an amount that is less than your total advanced premium tax credit, you get the difference when you file your income taxes as a tax refund. But, if the total of your advance premium payments is greater than the amount of your credit, you must pay it back with your tax filing.

Contact us now to begin the process of filing your tax returns.