On Thursday, June 25, 2015, the Supreme Court ruled in favor of tax subsidies for qualified taxpayers who purchase insurance through federally-run exchanges.
In short, advance premium tax credits will continue.
This is good news for millions of Americans who enrolled in health insurance through the federal marketplace and receive tax subsidies to help offset the costs.
How did we get here?
King v. Burwell is a lawsuit that went all the way to the Supreme Court.
It challenged the Affordable Care Act (ACA), also known as “Obamacare”, tax credits being paid by the federal government in the 36 states that did not establish their own exchanges.
The lawsuit claimed that the ACA, as written, did not give the federal government authority to pay APTC in these states.
If the plaintiffs in King v. Burwell had won, the federal government would no longer have been able to pay health insurance tax credits in these states under the current health law.
Report additional information on your tax return.
If you purchase health insurance through a government-sponsored marketplace (federal, state, or both) and receive the advanced premium tax credit, remember you’ll need to report some additional information on your tax return. Unless you qualify for an exemption, you are required to have health insurance coverage or face paying a penalty come tax time.
Update the marketplace with any life changes.
It is also important to remember that you should inform the marketplace about any changes you have experienced to your household, income, and insurance status. This is important as the information is used to help you get the most accurate tax credit so you don’t owe part of the amount back when you go to file your taxes.
Extension filers with the premium tax credit must file by July 31, 2015.
If you filed an extension for the 2014 tax year and you purchased health insurance coverage through a government-sponsored health insurance marketplace, don’t put off filing for much longer, if you haven’t already filed your return. In order to keep your advanced premium tax credit for 2016, you must file your final 2014 return by Friday, July 31, 2015.
Still need health insurance coverage for 2015?
The open enrollment period for 2015 has ended; however, you may be able to qualify for a Special Enrollment Period due to a life change. Open Enrollment for 2016 begins November 1, 2015 and ends on January 31, 2016.
As always, we keep track of all the tax law changes so you don’t have to.
More to explore:
- 12 Things Business Owners Need to Know about the ACA
- Older Americans and Seniors – What the ACA Means for You
- The Medical Expense Deduction After Tax Reform
- Coping with the Cost of Care: Often-Overlooked Tax Deductions and Tips for Seniors and Their Families
- Can You Deduct Facebook Donations from Your Taxes?