Many taxpayers will be looking backwards to 2015 finances as the filing season for income tax returns gets underway (on Tuesday, Jan. 19). But it’s going to pay to focus forward to 2016 now for one essential chore. If you haven’t locked in health insurance for the coming year, you’ll need to act by Jan. 31 to keep penalties as low as possible.
Remember the Affordable Care Act, also known as Obamacare? That federal law requires everyone – with few exceptions – to be covered by health insurance and to declare it on federal tax returns. Deadlines for purchasing affordable insurance through the ACA expire by the end of this month.
Most people already have their coverage in place. For example, taxpayers covered by employer-provided health insurance are not affected. The deadlines apply to residents who purchase through a low-cost federal or a state “marketplace” created by the ACA. The marketplace for Minnesota residents is called MNsure. See https://www.mnsure.org/
Here’s the reason for the rush. MNsure and similar insurance exchanges only accept new enrollments for insurance during a three-month window each year, unless there are special circumstances. We’re close to the end of the open enrollment period on Jan. 31.
Actually, the deadline for full-year coverage for 2016 was Dec. 28 and already has passed. But residents still can obtain 11 months of insurance – from February through December – by signing up with MNsure and selecting a plan through Jan. 15. Enrollment is available online.
Likewise, residents who enroll in MNsure between Jan. 16 and Jan. 31 still can buy 10 months of insurance (March 1-Dec. 31). Those with part-year plans might pay tax penalties for months in which they did not have insurance.
After Jan. 31, residents won’t be able to buy health insurance through the marketplaces until the open enrollment period for 2017 begins again, probably in the fall. Of course, residents always can check to see if they qualify for “special” enrollments.
One important improvement this year is people with insurance will receive notices from their marketplaces or their employers confirming that they are covered.
Health insurance was a new addition, beginning with the 2014 tax return. We at EricJohn Ltd. are ready to help with the new ACA reporting requirements.