Speak to an advisor1-888-855-6837
It’s tax time, and that means ghosts of health care open enrollments past may be coming back to haunt you.
If you’re using a tax accounting software, you simply need to answer the questions regarding your health insurance coverage and the penalty amount will be added to your total.
If you’re preparing your taxes using the IRS forms, you’ll use the Instructions for Form 8965, “Health Coverage Exemptions,” and report the result on the “Health Care: individual responsibility” line of your federal tax return.
Remember, you only pay the penalty for months during which you or a family member did not have coverage or a qualifying exemption.
Even though the IRS can’t pursue legal action against you, they can compel you to pay in other ways.
No payment: If you file your return and include your health coverage information but neglect to send payment, the IRS will automatically deduct the payment from any refunds you’re owed this year and in future years.
No proof of coverage/exemption: If you attempt to file your return without including the required health coverage or exemption information the IRS will reject your electronically filed tax return.
Paper returns that do not address health coverage requirements may be suspended and refunds delayed.
Here are your options for making your ACA shared responsibility tax payment:
Pay in Full - The simplest option is to pay the penalty in full when you file your tax return either by using a check or credit card.
If you don’t have the cash on hand it may be more affordable to use a no-interest credit card and pay the balance down before the interest rate kicks in than to use the IRS’s monthly installment plan.
Note that these installment plans can be expensive, anywhere from $31 up to $225 to set up the plan. You will also be subject to interest fees and late payment penalties. All the information can be found at the Instructions for Form 9465.
If you make payments on a regular basis, your credit should remain unaffected.
IRS Withholding - And finally, as previously mentioned, if you don’t voluntarily pay the penalty your future refunds will be at risk. The IRS will withhold penalty balances from the current year tax refund and any future tax refunds you may be owed.
Decisions you made during this year’s health insurance open enrollment will impact your taxes next year.
And since open enrollment ended for most of the country in December 2017, you may have trouble enrolling in a minimum essential coverage plan unless you qualify for a special enrollment period, qualify for a program without a limited enrollment period such as Medicaid or CHIP, or start a job that includes qualifying health coverage.
Remember, there are many possible exemptions available. If you think you may qualify for one or more in the coming year, make sure you understand the application and documentation requirements now and plan ahead. It will make filing your taxes next year easier.
Finally, hold onto receipts and keep track of your medical expenses so that you can get the most out of your available deductions.
 Internal Revenue Service. “2018 Tax Filing Season Begins Jan. 29, Tax Returns Due April 17; Help Available for Taxpayers.” Last reviewed or updated Jan. 5, 2018. https://www.irs.gov/newsroom/2018-tax-filing-season-begins-jan-29-tax-returns-due-april-17-help-available-for-taxpayers
 Internal Revenue Service. “Individual Shared Responsibility Provision – The Basics.” IRS Health Care Tax Tip 2016-04, January 12, 2016. https://www.irs.gov/affordable-care-act/individual-shared-responsibility-provision-the-basics
 HealthCare.gov. “The Fee For Not Having Health Insurance: What Happens if I don’t pay the fee.” Accessed March 7, 2018. https://www.healthcare.gov/fees/fee-for-not-being-covered/
 IRS Statement on Health Care Reporting Requirement, “https://www.irs.gov/tax-professionals/aca-information-center-for-tax-professionals” Jan. 5, 2018.
 Internal Revenue Service. “Additional Information on Payment Plans.” Last reviewed or updated March 6, 2018. https://www.irs.gov/payments/payment-plans-installment-agreements