Many people have benefitted from the Affordable Health Care Act while others have been put through last minute unannounced changes and cancellations of policies that have made the transition anything but pleasant. 

At the very least, I think that it has been very confusing to figure out how the new requirements affect you and what you will need to do when filing your 2014 income tax return.  Do you feel that way, too?  I thought this overview would help you.

When you file your 2014 income taxes, you will have to make the following decisions:

• Did you have qualifying health coverage in 2014 that satisfies the minimum essential coverage requirements?
• Did you qualify for a health coverage exemption in 2014?
• Do you need to make a shared responsibility payment when you file your 2014 income tax return in 2015?
• If you obtained your insurance through the Health Insurance Marketplace, are you eligible for a Premium Tax Credit, or do you need to make an adjustment to a credit you claimed when obtaining your insurance?

As you are gathering your year-end tax documents, you should be aware of the three tax reporting documents you should gather along with your tax reporting documents and other supporting documentation you may need in connection with this:

• Form 1095-A Health Insurance Marketplace Statement – if you  enrolled for health insurance coverage through the Health Insurance Marketplace, or
• Form 1095-B Health Coverage* - if you were employed by a company with less than 50 employees or you purchased coverage from someone other than your employer, or
• Form 1095-C Employer-Provided Health Insurance Offer and Coverage* – if you were employed by a company with 50 or more employees.
• A letter from your health care insurer explaining whether your health coverage qualifies as minimum essential coverage, if applicable, and
• Other supporting documentation such as W-2s, insurance cards, explanation of benefits from your insurer, or other proof of your coverage or exemption status should you ever be questioned.

*Please note that forms 1095-B and 1095-C are optional forms for 2014, so you may not receive these documents, and you may receive a letter from your health insurance carrier with an explanation to help you make the decisions. 

You should keep documentation in your files as proof of your health coverage as well as documentation in support of any exemptions or hardships you may claim in case you ever need to prove it.

How do you know if you have minimum essential coverage?  Check this link or consider the following categories which you can include:

• Most health insurance coverage provided by your employer
• Health insurance you purchased on the federal or state-sponsored Health Insurance Exchange
• Coverage you received under a government-sponsored program such as Medicare, Medicaid, or Health care programs for Veterans
• Health insurance you purchased directly from an insurance company, and
• Other health insurance coverage you have that is recognized by the Department of Health & Human Services as minimum essential coverage

How do you determine if you are eligible for an exemption?  To see what types of coverage exemptions may apply to you, please see the attached Types of Coverage Exemptions pdf chart below.  Exemptions you may qualify for include:

• Coverage considered unaffordable (minimum premium > 8% of household income)
• Gap in coverage at the beginning of 2014
• Employer coverage with non-calendar plan year beginning in 2013
• General hardship
• Member of a certain excluded group such as citizens living abroad and certain noncitizens and nonresidents, Indian tribes, or other defined groups listed in the chart.

If you and your dependents do not have the minimal essential coverage and you do not qualify for an exemption, you may need to make a shared responsibility payment on your 2014 income tax return.  The calculation will be made based upon your filing status, dependents you can claim and adjusted gross income for you and your dependents required to file a tax return.

If you purchased your health care coverage on the Healthcare Exchange, you will use this same information to calculate whether you are eligible for a Premium Tax Credit or need to adjust a credit taken at the time of purchasing your insurance.

I know how complex this topic is and this was intended to try to help you simplify the explanation of a very involved process.  Hopefully, this gives you an idea of what to expect.