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3 Keys To Obtaining and Claiming a Health Coverage Tax Exemption

3 Keys To Obtaining and Claiming a Health Coverage Tax Exemption

Three Ways to Obtain and Claim a Health Coverage Tax Exemption
For those who enroll in healthcare through the Affordable Care Act, it is important to remember that there are tax exemptions for people enrolled in these plans. Some exemptions are applicable when you file your return, while others require pre-reporting through a network known as the Health Insurance Marketplace.
Anyone who pays more than 8 percent of their annual income towards health premiums is exempt from the marketplace, along with those who had a gap in their coverage of three months or greater. Similarly, hardships or other exceptions are available where direct filing is accepted. Here is a look at the three ways to receive the health exemption in your taxes.
Claiming While Filing:
There is a specific form 8965 that covers health exemptions. Make sure to fill out this form and attach it to your regular taxes when you are submitting them. This is possible for both mailed and electronically submitted tax returns.
If anyone has an annual income that falls below the level of taxation, consider yourself automatically enrolled in the tax exemption. There is no need to file for a health exemption if you are not paying any taxes this year because of a lower income.
Some other tax-related exemptions for health coverage are available and covered in the third part of Form 8965. If you qualify for all the conditions specified in that form, you do need to pre-file anything with the IRS. It is important to check this form in advance so you are prepared for either situation.
Marketplace Exemptions:
When getting an exemption through this method, the marketplace generally sends you a form highlighting your eligibility for the exemption, along with a special ECN code. All you have to do is take that code and enter it on the relevant IRS form while filing your taxes. If you have not received a letter with this form, you need to contact the marketplace and complete the required steps before filing your taxes. If you submitted the necessary documents to the marketplace and they have not gotten back to you, specify “pending” when you fill out your IRS forms related to health exemptions.
Electronic Tax Filing:
Some people prefer to file their taxes online and save time spent on paperwork. In these cases, it is best to use an appropriate software that prepares your taxes, because this software can automatically indicate how much you are saving through health exemptions.