Taxes and Healthcare FAQs

Posted on Mar 24, 2016 in Main

Frequently Asked Questions
about How Taxes Affect Healthcare Coverage

 

The Department of Human Service cannot provide tax advice. Because our Med-QUEST Division helps individuals and families get health insurance through HealthCare.gov, we are providing some basic information to help you understand how your tax filings can affect your healthcare coverage.

What happens if I don’t file my taxes?

If you received advanced premium tax credits, you MUST file your taxes, even if a filing exemption applies to you. It is a federal government requirement. This a new and important step this year that will preserve your ability to receive help with health insurance in 2017.

More specifically, filing taxes allows you to reconcile the amount you received in tax credits. If you do not file your taxes and reconcile those amounts, you may not be eligible for tax credits for 2017 healthcare coverage. This can translate to significantly higher out-of-pocket costs for you when it comes to healthcare coverage.

The Taxpayer Advocate Service provides important information about how APTC affect you and the importance of filing taxes in a special webpage on these credits.es here

But I don’t make enough income to file, do I still need to do something?

Yes! Even if your 2015 income was zero, you must file if you had help paying for your 2015 insurance through the Hawai‘i Health Connector.

I don't know if I got advanced premium tax credits. How can I find out if I received them?

If you purchased healthcare coverage for 2015 from the Hawai‘i Health Connector (or another state’s marketplace), it’s very likely you received advanced premium tax credits. Your 1095-A form will show the amount credited.

Are there any community, free or reduced-fee tax services that can help me understand how APTC may affect my taxes?

Visit either Hawai‘i Tax Help or Goodwill Hawai‘i to make an appoint to get your taxes done. If your income is below $54,000, they will be able to help you for free.

You will need to bring a copy of your Form 1095-A in addition to other important financial documents.

Will I owe money if I file for APTC?

The Department of Human Services cannot provide tax advice. It is important to note, however, that the function of filing your taxes for advanced premium tax credits is so that the federal government can reconcile the credits it promised you and those it paid to you or your health plan. If at the end of the year you took less than you were qualified for based on your final income, you could actually receive the difference back in a return according to HealthCare.gov. However, if you’ve taken more credits than your final income qualifies you for, you may owe taxes.

Additionally, filing your taxes and accounting for those APTC ensures you can receive tax credits again in 2017. In other words, it will make it possible for you to get financial assistance later on that you will not be able to get if you do not file a tax return.

What is an advanced premium tax credit (APTC)?

Advanced premium tax credits, also known as APTC, can reduce what you pay for insurance. According to HealthCare.gov, “When you apply for coverage in a health insurance marketplace (like the Hawai‘i Health Connector in 2015), you estimate your expected income. If your estimate falls in the range to save, you can use an advanced payment of the premium tax credit to lower your monthly insurance bill.” At the end of the year you will need to reconcile the credit you were given when you estimated your income with your final income. You do this reconciliation with the help of the Form 1095-A.

What is a Form 1095?

If you had healthcare coverage for 2015, you should have received a 1095 form. Where you got your coverage from will affect which forms you got. If you enrolled through the Hawai‘i Health Connector or another marketplace, you will receive a 1095-A form, which will account for any advanced premium tax credits you might have received.

If you received a 1095-B or C form, then you received your health insurance through your employer and did not receive those tax credits. Some employers may not automatically provide you with a Form 1095 because they are not needed for filing.

Healthcare.gov provides assistance on these forms and how it may affect how you file your taxes.