Nov 13, 2018

Health Care and Taxes: Update for Individuals

Nancy MontanyeBy Nancy Montanye, CPA

MoneyLife100Fall is the annual open enrollment period for health care coverage! On the health insurance Marketplace, the sign-up window for 2019 individual health insurance is from Nov. 1 through Dec. 15, 2018. Insurance can also be acquired through your employer, private insurance, or a government-sponsored program. Beginning in 2019, there will no longer be a shared responsibility penalty for being uninsured or for having health insurance that fails to meet the minimum essential coverage required under the Affordable Care Act.

For 2018, the mandate to have insurance coverage or pay a penalty (with some exceptions) still exists. The filing thresholds have changed, however, as has the average premium for the bronze plan. The following charts are updates from Marc Weber’s blog posted on CPA Now this past March.

2018 Federal Tax Filing Requirement Thresholds

Filing Status
Must File a Return if Gross Income Exceeds …
Under 65
65 or older
Head of Household
Under 65
65 or older
Married Filing Jointly
Under 65 (both spouses)
65 or older (one spouse)
65 or older (both spouses)
Married Filing Separately
Under 65
65 or older
Qualifying Widow(er) with Dependent Child
Under 65
65 or older

2018 National Average Premium for Bronze-Level Marketplace Plan

$3,396 per year
$283 per month
Family of Five or More
$16,980 per year
$1,415 per month

When deciding on the best health insurance plan for you and your family, consider both cost and coverage. Your cost may be reduced by a Premium Tax Credit, but to qualify for this credit you must purchase insurance through the Marketplace. Also, eligibility is based on your income level – 100 percent to 400 percent of the federal poverty level. Form 8962 used for the Premium Tax Credit requires your tax family size. This is the number of exemptions on the tax return. Since personal exemptions have been suspended under the Tax Cuts and Jobs Act, the IRS recently clarified that all individuals reported on the tax return, if not a dependent of another person, are treated as claimed exemptions for health care provisions.

An advance on the Premium Tax Credit received during the year is adjusted when your tax return is filed, using information from Form 1095-A, Health Insurance Marketplace Statement, for Form 8962. The original credit calculation is based on an estimate, whereas the tax return uses actual income. As a result, any underpayment of the premium credit may increase your refund or offset any tax due. An overpayment of the credit will be added to your tax due.

Health care remains a hot topic for voters and politicians alike. Future changes to the Affordable Care Act seem inevitable, and the PICPA will continue to provide relevant updates as warranted.  

Nancy G. Montanye, CPA, is a sole practitioner in Williamsport, Pa. She is a PICPA member and serves on the CPA Image Enhancement Committee.

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Statements of fact and opinion are the authors’ responsibility alone and do not imply an opinion on the part of PICPA officers or members. The information contained in herein does not constitute accounting, legal, or professional advice. For professional advice, please engage or consult a qualified professional.