Minimum Essential Healthcare Coverage and US taxes
Updated: Feb 9
Updated June 16, 2019: The Shared responsibility payment is reduced to zero for tax years starting in 2019.
Form 8965 is no longer required and the healthcare coverage questions is no longer included on form 1040.
The individual shared responsibility provision requires everyone on your tax return to have qualifying health care coverage for each month of the year or have a coverage exemption. Otherwise, you may be required to make an individual shared responsibility payment". If you do not meet the minimum essential coverage or is not exempt from the individual mandate, you might be subject to the individual shared responsibility payment when you file your tax return. The payment for 2018 is the greater of 2.5 percent of the household income, or $695 per adult plus $347.50 per child under 18 (limited to a family maximum of $2,085. The payment is capped at the premium of the national average of the bronze level.
If you were covered for the entire year through a private employer, there is no reporting requirement on your tax returns except checking the box on your form 1040 to indicate you had full year coverage box (due to the recent change in the form 1040, the checkbox is no long on page 2 of 1040). Connect with your CPA at Whin Global Tax Services, if you have you any questions.
Healthcare information forms provided to covered individuals are:
1095-A – Statement received from the Health Insurance Marketplace,
1095-B – Health coverage form received from Health Insurance Providers such as insurance companies,
1095-C – received from Applicable Large Employer (ALE), employer-provided Health Insurance Offer and Coverage.
There are many Exemptions to the health insurance mandate. For Individuals, please visit the Affordable Care Act link ACA page at the IRS website for more information. If you go without coverage or have a gap in your coverage, you should file form 8965 to claim an exemption if you qualify.
The Premium tax credit is claimed on Form 8962. A reconciliation is generally required to be completed when you prepare your Income Tax Return if you have received Advance payments for healthcare through the marketplace.
Premium tax credit letter: If you receive letter 0012c, please work to resolve it soon as possible with the IRS.
American citizens or green card holders expats who meet the requirement of claiming the Foreign earned income exclusion under the BFR or PPT rules, are exempted from the minimum essential coverage requirement. Off course, many individuals have heath insurance in the countries where they live. But regardless of the plan you are under, if you meet the BFR or PPT test, then you are exempt. Therefore, form 8965 must be filed with your tax return to show that you are exempt because you are a citizen living abroad.
Please contact your certified public accountant at Whin Global Tax Services at firstname.lastname@example.org if you have any questions. Taxes for Expats are sometimes complicated. Please get in touch if you have any questions related to filing your expat tax return or reports of foreign financial assets, whether you are current or late on your filings.