How do I report Health Coverage on my taxes?

Who should file?

Form 8965, Health Coverage Exemptions, is filed with your 2016 return if you, or anyone on your return, did NOT have health insurance coverage for the entire year.  You should file Form 8962 if you qualified for a Premium Tax Credit as outlined by the Affordable Care Act.

What is Form 9865 purpose?

  • If you can claim to waive the penalty for not having health insurance, you should report the exemption on this form. Exemptions are available for several different circumstances.  Examples include certain hardships, some life events, membership in select groups and current financial status.  The exemption can be claimed on your tax return.
  • If you don’t qualify for an exemption, use Form 9865 to calculate the penalty for not having insurance. For 2016, the penalty will be a flat dollar amount per household or 2.5% of your household taxable income.   The flat tax is $695 per each adult and $347.50 per each child.  Calculate the percentage and compare it to the flat tax total amount.  Use the larger of the two numbers.

Form 8962- Premium tax credit

Form 8962 is used to determine the amount of your Premium Tax Credit.  If you purchased health insurance in 2016 through Healthcare.gov or your state’s Health Insurance Marketplace, you may qualify for a tax credit based on your income.

You have 2 options for receiving the Premium Tax Credit:

  • Take some or all of an estimated credit amount during the year as an Advance Premium Tax Credit (APTC). This option provides a discount to your monthly premium. At the end of the year, you will file Form 8962 to ensure you paid enough per your total taxable income.
  • Take the credit when you file your return. For this option, you will pay more per month and at the end of the year, file Form 8962 to calculate your credit per your taxable income and total amount paid in premiums.

BE AWARE! The credit is an estimate! If your income for 2016 was more than you estimated, you may have to pay back some of the credit.  If you received the Premium Tax Credit as a monthly advance (APTC) to reduce your healthcare premiums, the credit was based on your 2016 estimated income.  Once you find out your total income, if you made more than estimated, you may have to pay back a portion of the credit.

Also, if you received the Premium Tax Credit as a monthly advance (APTC) to reduce your healthcare premiums, and your income for 2016 is less than you estimated.  Or, if you didn’t take the monthly advance credit, and you qualify for it, you will get the entire credit on your 2016 tax return.  Follow this link to get more information on the Premium Tax Credit.

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