ACA Tax Penalty and ACA Tax Credits Are Tricky Waters to Tread in 2014

The Premium ACA Tax Credit: What’s the Benefit and Who Qualifies?

While it won’t affect your 2013 tax return, you may be eligible for the premium ACA tax credit if you can still meet the March 31, 2014 open enrollment deadline for purchasing insurance coverage through the Marketplace.

Find Out If You’re Eligible

The premium tax credit makes insurance coverage more affordable for those with low or moderate incomes. Generally, those eligible for the ACA tax credit meet all of the following requirements:

  • Health insurance purchased through the Marketplace by the March deadline
  • Denied eligibility government plans like Medicaid, Medicare, CHIP, or TRICARE
  • Unable to afford an eligible minimum value employer coverage plan
  • Household income lies between 100 percent and 400 percent of the federal poverty line, translating to $11,490 to $45,960 for one individual, $15,510 to $62,040 for a family of two, and $23,550 to $94,200 for a family of four
  • Do not file a Married Filing Separately tax return
  • Cannot be claimed as a dependent by another person

Household income is calculated by adding your modified adjusted gross income to the income of individuals in your family who qualify as personal exemption deductions on your tax return.

As for employer plans, the ACA deems minimum value plans affordable if self-coverage premiums don’t exceed 9.5 percent of your household income. To determine if your employer’s plan meets minimum value requirements, ask your employer to show you the plan’s “Summary of Benefits and Coverage”, which will indicate coverage details.

ACA Tax Penalty Means Extra Work and Fees for You

The government calls it the “Individual Shared Responsibility Provision”. If you can afford to fulfill the responsibility and don’t, you must pay the ACA tax penalty, and you’ll still have to pay all of the year’s medical bills.

Depending on your income level, the tax penalty will either be 1% of your annual household income, or $95 per single adult. Tax penalties for families cap out at $285 for the first year.

You’ll be required to pay the penalty if:

  • You’ve been uninsured for more than 3 months
  • Your coverage does not meet ACA minimum essential requirements
  • You neglected to purchase insurance through the Marketplace by March 31, 2014
  • Your coverage is restricted to vision, dental, a specific disease, or is only workers’ comp

Obamacare Exemptions for Those Experiencing Life’s Roadblocks

Some people with extenuating life circumstances may be eligible for ACA exemptions, waiving the ACA tax penalty.

Exemption eligibility requirements include:

  • Coverage gaps of less than three consecutive months during the year
  • Membership of a religious sect that is opposed to ACA stipulations
  • Membership of a federally recognized Indian tribe, or eligibility for Indian care services
  • Qualifying hardship situations such as job loss, income changes, homelessness, eviction, natural disasters, and other cases
  • Coverage unaffordability due to minimum amount required exceeding 8 percent of household income
  • Income level lower than income tax return filing threshold
  • Incarceration status
  • Undocumented immigrant status

For any other questions on ACA legislation, EInsurance is standing by with the answers.


EINSURANCE is a one stop shop for insurance quotes comparison. Our writers, researchers, and industry experts all work together to inform consumers about online insurance marketplace. Whether you’re buying your first car insurance policy or finding health insurance for your families, EINSURANCE always provides latest relevant information to your choices.