Millions of consumers are enjoying the peace of mind that comes with comprehensive coverage, and enrollment stakeholders are gearing up for the second open enrollment period (OE2) to help consumers get covered and stay covered. It’s a busy time! And, for enrollment stakeholders, it means helping many consumers understand the connection between health coverage and taxes come tax filing time.
Tax Time and Health Coverage — What’s the Connection Again?
Eighty-five percent of marketplace enrollees purchased plans with financial help in the form of tax credits. When an individual applies for financial help to purchase coverage through the marketplace, they are asked to project their annual household income. Among other factors, this dollar amount is used by the marketplace to determine whether the consumer can get financial help to purchase coverage, and if so, how much. Enrollees can wait until tax time to receive their tax credit or they can have the tax credit applied to their monthly premium payment.
Many individuals opted to take the tax credit in advance. These consumers will be required to compare (i.e. reconcile) the amount of tax credits they received in 2014, which was based on their projected income, to the tax credit amount they are eligible for, which is based on their actual income.
If the consumer’s actual income is less than projected, they will likely get a refund at tax time. If the consumer’s actual income is more than projected, they will likely need to pay money back to the federal government.
What Consumers and Enrollment Stakeholders Should Expect
Current enrollees receiving financial help will be sent a form by the marketplace early next year letting them know the amount of tax credits that went to their issuer during 2014 to reduce the cost of their coverage. They will use that information when filing their taxes in early 2015.
We know that filing taxes isn’t always the most fun for consumers and that many enrollees will have questions about to report the amount of assistance they received to purchase coverage on their tax return. But have no fear! The Volunteer Income Tax Assistance (VITA) Program and the private tax preparation industry can help consumers complete the tax filing process.
Also, don’t forget, tax time is a great way to connect consumers to coverage for the first time. There is a small window of overlap between tax time and open enrollment this year, and the information a consumer needs to file their taxes is much of the same information that they will need to apply for coverage with financial help through the marketplace (e.g. information about household income).
Certain tax preparers, such as Intuit, Jackson Hewitt, and H&R Block are equipped to help consumers file their taxes and apply for coverage at the same time, and many taxpayers can take advantage of significant refunds to purchase new coverage.
Enroll America intends to work alongside these tax experts next year during OE2 and the tax filing season to ensure that consumers continue to #GetCovered and #StayCovered.