are health care tax credits taxable
Tax credits for low-income filers: If you can’t afford health insurance, you may be eligible for tax credits to help you pay the cost of coverage if you earn between 133% and 400% of the federal poverty level. Health Care Premium Tax Credit. The premium tax credit (PTC) makes health insurance more affordable by helping eligible individuals and their families pay premiums for coverage purchased through the Health Insurance Marketplace (also called an Exchange). Health plans are not income: Even though the value of your plan is reported on your W-2, it’s not taxable. So you don’t need to report it as income on your tax return. Penalties for those without medical coverage: The penalty started at $95 or 1% of income (whichever is greater) per person in 2014. File a tax return. If you receive the premium tax credit, you must file a tax return. You should wait to file your tax return until after you receive a Health Insurance Marketplace Statement (Form 1095-A) in the mail – probably in early February. It will come from your marketplace, not from the IRS. The amount of tax credit you qualify for depends on your income and the size of your family. In addition, households with lower incomes may qualify for subsidies to help lower the cost of doctor visits, hospital stays, and other types of medical care. The health care reform law helps lower the cost of health insurance for families with low to moderate incomes who make too much money to qualify for Medicaid. There are two main types of financial help: premium tax credits and cost-sharing subsidies. This Aug. 21, 2014, photo shows health care tax forms 8962 and1095-A, in Washington. Who thinks about taxes around Labor Day? If you value your tax refund and you're one of millions getting a health insurance tax credit under President Barack Obama's health care law, it's not too early. While there are some tax implications of the new law, there’s no need to panic. The revisions are gradual and stretch out over 10 years. You’ll have plenty of time to adjust to them. Some changes to tax credits and medical accounts went into effect in 2010 and 2011 while the major changes started in 2013 and 2014. The average tax credit for subsidized coverage on the new health insurance exchanges is $264 a month, or $3,168 for a full 12 months. The average tax refund is about $2,690. Having to pay back even as little as 10 percent of your tax credit can reduce your refund by several hundred dollars. When you sign up for health insurance in a Marketplace, you'll have a few choices for how you'd like to use the money from a tax credit. 1  You can use it in advance. 2  You can split the money between premiums and a tax refund. 3  You can pay all of the premium yourself and apply the tax credit to your taxes.
Yes, health care are tax credits taxable.