What You Need to Know

The Affordable Care Act, also known as "health care reform," has brought big changes to the U.S. health insurance system. Many of the biggest changes began on January 1, 2014.

You Must Have Insurance

Most Americans will be required to have health insurance, or pay a penalty. This is commonly referred to as the "individual mandate." The good news is that you cannot be turned down for insurance, regardless of medical history or ability to pay. That will make it easier to find insurance and avoid the penalty.

The penalty is $695 per adult in 2016. You will not have to pay the penalty if:

  • You have insurance through your employer.
  • You buy insurance on your own.
  • You have insurance through Medicare, Medicaid, the Children's Health Insurance Program (CHIP), the Veteran's Administration and/or Tricare for active duty and retired military, Indian Health Services, or a health care sharing ministry.
  • You must pay more than 8% of your household income to buy the least expensive health insurance plan that's available to you, even after you consider any financial help you may be eligible for.
  • You qualify for a hardship. This applies if you aren't eligible for Medicaid because your state chose not to expand Medicaid, or if you have a personal or financial issue that keeps you from being able to afford insurance.
  • You have a gap in health insurance coverage for less than three consecutive months in a calendar year.
  • You don't make enough money to file a government income tax return.
  • You live outside of the U.S.
  • You're in one of these categories: undocumented immigrants, people who are in jail, members of Native American tribes, and those who qualify for a religious exemption.

Keep in mind that you will have to prove you're covered. After you enroll in Marketplace coverage, you'll get a form from your insurance company that says you have the minimum coverage. You'll need to submit that new form with your government tax return.


*The 2016 tax penalty for going without coverage is 2.5% of your income or $695 per adult and $347.50 per child. You’ll pay the higher of the amounts. In future years, the fee is adjusted for inflation.

More Health Insurance Options Will Be Available

To give more people access to health insurance:

  • You'll have the option to buy insurance through a state or government marketplace, or "exchange." Put simply, a marketplace is a website where health insurance companies come together to give you a place to shop for health insurance. That way, you have one place to compare options for private health insurance side by side. Financial Help may be available to you for insurance that you buy through the marketplace.
  • Additionally, beginning in 2015, all employers with 50 or more employees will be required to offer health insurance to full-time employees (that is, employees who work 30 or more hours a week). This is commonly referred to as the "employer mandate." That doesn't mean you have to buy health insurance through your employer-it just means it must be available to you.

If you can't afford the health insurance offered to you through your employer or in a marketplace, you may qualify for Medicaid or the Children's Health Insurance Program. Each state has its own eligibility requirements for these programs.


Find out more about your options and what you need to do if you choose to enroll through a marketplace.

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Tax Reporting Requirements and the Affordable Care Act

Generally, the Affordable Care Act requires that you and each of your dependents have qualifying health coverage (known as “minimum essential coverage”) for the entire year. Compliance with this requirement is tracked via reporting on individual tax filings. Coverage requirements are called out on Line 61 of the Individual Form 1040 (see an example) How you report your coverage differs depending on where you obtained your coverage.

If you obtained qualifying health coverage through a state or federal exchange

You should receive a Form 1095-A – Health Insurance Marketplace Statement from the exchange via the US Mail. Your exchange may also make these available via electronic download.

If you obtained qualifying health coverage through another source, such as through your employer

You will not receive a Form 1095-A Qualifying health coverage from a source other than a state or federal exchange generally includes coverage obtained through employer-based plans (including COBRA). Medicare Part A, Medicare Advantage plans, most Medicaid coverage, and Children’s Health Insurance Program (CHIP) coverage.

If you didn’t obtain qualifying health coverage during all or any part of 2014 and don’t qualify for an exemption, you may be subject to a tax penalty.

In 2016, the penalty will be at the greater of 2.5% of your taxable income or $695 per adult and $347.50 per child (up to $2,085 per family).


Need more information? Check out the IRS site at: http://www.irs.gov/Affordable-Care-Act/Individuals-and-Families