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>> Catherine: I'm Catherine from the IRS, and I would like to welcome you to our online session about two key provisions of the Affordable Care Act, also known as the Health Care Law. I'm here with Bill, who will talk about the individual shared responsibility provision and the premium tax credit.

Almost everyone will do something new when they file their tax return this year. Most taxpayers will simply check a box on their tax return to indicate that each member of their family had qualifying health coverage for the whole year. No further action is required. Some will be exempt from coverage, while others will need to make a shared responsibility payment when they file.

Before I turn the session over to Bill, I would just like to remind you that has information, online tools, and answers to commonly asked questions that can get help right away for you. And that using free file tax software, and E-file, will help you file a complete and accurate tax return and avoid processing delays.

Now, here's Bill to talk about the individual shared responsibility provision and what's new for individuals and families this filing season.

>> Bill: Thanks, Catherine. And hi, everybody. My name is Bill, and I want to thank you for attending today's presentation. As Catherine said, we'll be talking about two key provisions that are affecting everyone's 2014 tax returns. That is the individual shared responsibility provision and the premium tax credit. Again, we're going to cover a lot of information today, so let's go ahead and get started.

As you can see, the information in this presentation is current as of March 6, and again, all the information that we're covering is available also on, as well as our current tax forms, instructions and publications. So again, you don't have to take heavy notes today, but you can visit our website at for the latest information about the tax provisions of the Affordable Care Act.

As you can see on the agenda here, again, we're going to be covering a little bit of background about the Health Insurance Marketplaces and their role. We'll be talking about the shared responsibility provision, you know, what is minimum essential coverage, who might be eligible for coverage exemptions, and how to claim them. We'll also be talking about the premium tax credit, who is eligible for that new credit; how to reconcile advance payments; and a new Form 8962, used to file and claim the premium tax credit.

We'll also talk about resources, including Publication 974, again, that are available to assist people with filing and questions that they might have.

So to begin, the Department of Health and Human Services or HHS is the lead agency for administering the Affordable Care Act. The IRS's role is of course administering the tax provisions that were included.

So HHS is responsible for enrolling individuals in health care coverage through the Health Insurance Marketplaces, and helping individuals get the appropriate financial assistance that they need, including advance payments of the premium tax credit.

So the marketplace is the main information source for all health insurance options under the ACA. It's also the source for certain exemptions from the shared responsibility provision, and it's the only source of -- the only source of advance payments of the premium tax credit. You can visit for information about the marketplace, both the federal marketplace, and again, it can direct you to state-based marketplaces if you reside in one of those areas.

We just finished the second marketplace open enrollment period for 2015, and the next open enrollment period for 2016 insurance will begin in November, November 1st of 2015, and run through January 31st.

In the interim, some individuals can qualify or may qualify for a special enrollment period that allows them to purchase insurance outside of the normal open enrollment. So again, the best place to find out more information about HHS, the marketplace, or enrollment, is at

So next we're going to talk about the shared responsibility provision. So under the Affordable Care Act, the federal government, state government, insurers, employers, and individuals, all have a shared responsibility to improve the availability, quality, and affordability of health insurance coverage in the U.S.

Starting in 2014, this provision requires all individuals to have for each month of the year either minimum essential coverage, also known as MEC, or a coverage exemption. For any month that an individual does not have coverage or an exemption, they may have to make a payment for those months when they file their federal incomes tax return.

Now, the good news is that most individuals in the United States already have health insurance coverage that qualifies as MEC. So they won't need to do anything else other than continue the coverage that they now have.

So let's talk about this provision in a little bit more detail. Who is covered or who is subject to this provision. So this provision impacts individuals of all ages, including children. Every individual must address the MEC coverage requirement on their 2014 tax return, and we'll show you how to do that later in the presentation.

Adults and married couples who can claim a child or another person as a dependent for federal income tax purposes is responsible for ensuring that all their dependents also have minimum essential coverage, or an exemption from the coverage requirement. They'll need to make a payment for each month they or any of their dependents do not have coverage or an exemption.

Senior citizens are also subject to the requirements, but both Medicare Part A and Part C, known as Medicare Advantage, both qualify as MEC. These apply to U.S. citizens as well as noncitizens who are in the U.S. long enough during a calendar year to qualify as resident aliens for tax purposes. U.S.

citizens living abroad are treated as having minimum essential coverage if they're not physically present in the U.S. for at least 330 days during a 12 month period, or if they're a bona fide resident of a foreign country for the year.

U.S. citizens who travel abroad for shorter periods of time that don't meet that physical presence or the residency requirements do need to maintain minimum essential coverage, qualify for an exemption, or make a payment.

So just to recap, I know I've covered a lot of information there, each person has to have minimum essential coverage or a coverage exemption, and if they don't, a shared responsibility payment would be required.

So we've covered this, so now let's go into a little bit more detail about what qualifies as a minimum essential coverage. So the Internal Revenue Code spells out what qualifies as minimum essential coverage, and we're going to be showing you the major categories on the screen here, and also kind of tell you about resources where you can go to find out specific plan information. And in particular, you can go to, and we have a chart of plans that meet the definition of MEC. We also have a chart that shows other specialized coverage that does not meet the definition. You can also go to, there's information there, as well.

So the major categories of plans that do meet the minimum essential coverage requirement are the three bullets you see here on the screen. So coverage provided by an employer, including COBRA plans and retiree coverage, those plans qualify. You know, those are both -- those are offered to both employees and their dependents. And so again, if they have coverage, they have minimum essential coverage.

Coverage under most health -- I'm sorry -- coverage offered under most health plans in the individual market, and all qualified health plans offered through the Health Insurance Marketplace qualify. And the third bullet you see on the screen is that coverage under certain government-sponsored programs, such as Medicare Part A and Part C, most Medicaid coverage, the Children's Health Insurance Program, and other certain government programs also qualify as minimum essential coverage.

So now that we've talked about the major categories of the plans that do meet the definition, let's talk about a few that do not meet the definition. So generally speaking, specialized coverage is not MEC.

Some examples of specialized coverage are coverage for vision or dental care, workers compensation, accident or disability policies, and Medicaid coverage that provides only specialized services, like family planning, tuberculosis related services, or limited treatment of other certain conditions.

Now, the IRS has issued some transition relief for 2014 for individuals who are covered under some limited benefit government programs, and you can find information about that on Again, the good news is that most individuals in the U.S. have coverage today that qualifies as MEC and can just maintain that coverage.

Individuals who do not have coverage, again, they should visit to kind of assess their eligibility for coverage, and potentially for financial assistance.

So we've said earlier, right, every individual has to address the minimum essential coverage requirement on their tax return, and so the IRS has updated all of our 1040 tax returns so that an individual can either indicate that everybody in their household had coverage for the entire year, or they can attach a form to claim a coverage exemption, or they can report and make a shared responsibility payment.

So as you can see here on the screen, for taxpayers whose entire tax household maintained minimum essential coverage for all 12 months of the year, report that on line 61 when they filed a return. And again, if everybody had coverage, including themselves, their spouse, and all dependents for the entire year, they can simply check the box, you leave the entry space blank, and that's all there is to it. No forms are required to be attached.

We have a similar line on the 1040A and 1040EZ to allow this type of reporting. And just to give you a quick example, just to give you an example, let's say Suzy is single and she had employer sponsored coverage for the entire year. She would just check the box under 1040 when she filed her return, okay?

And we're actually going to cover in the next couple of slides, you know, how to actually claim a coverage exemption, or when you might actually have a dollar amount there in line 61 for individuals who would owe a shared responsibility payment.

All right, so if you think somebody qualifies for an exemption, how do they claim it. Well, it all depends upon the type of exemption. There are several different coverage exemptions from the provision, and some are obtained through the marketplace directly, and many are obtained through just the filing of a tax return. And there's a few that actually can be obtained either way, so we're going to kind of cover those into more detail in the next couple of slides.

Again, has a great exemption chart showing, you know, each of the types of exemptions and how they can be obtained.

Now, one key point I wanted to make here is that requests for exemptions that can only be granted by the marketplace should be applied for as soon as possible. That way they can report the exemption when they file their tax return. Most exemptions can be claimed directly on the IRS tax return, and again, we'll show you which exemptions qualify for that. And again, those are very easy to claim when you file your federal tax return.

All right, so now you can see on the screen some of the different types of coverage exemptions, and these are the types that are available only when you file a federal tax return. So let's kind of go over each of these in a little bit of detail. The first exemption is the affordability exemption, and this is for individuals who can't afford coverage because the minimum amount that they would be required to pay for their insurance premium would be more than 8 percent of their household income. Now, for this provision, household income is the adjusted gross income from the individual's tax return, plus any excludable foreign earned interest income, and tax-exempt interest that they received during the year.

In addition, household income must include the incomes of dependents who have sufficient income that makes it where they're required to file a federal tax return. So again, we're talking about a true tax household including dependents who are required to file.

If you have a household on the affordability exemption, if you have a household where the costs, combined costs of a husband and a wife, for them to each purchase insurance would exceed 8 percent of household income, they would also qualify.

The second coverage exemption is for short-term coverage gaps. And so any individual who had a gap in coverage that is less than 3 consecutive months during the year, so again, if they had a 1 or 2 month gap, they could claim the short coverage gap exemption.

If an individual had multiple gaps during the year, this gap would -- this gap exemption would only apply to the first coverage gap.

Now, I guess an important point to mention here, when we talk about coverage gaps, is that for purposes of this provision, if somebody has coverage for one day during the month, they are considered covered for the entire month. So again, partial months of coverage are considered as months of full coverage for purposes of this provision.

The third type of exemption is for those that are not law fully present. So an individual who is not a U.S.

citizen, a U.S. national, or an alien lawfully present in the U.S. qualifies for an exemption.

The fourth exemption is for those individuals or households that have no filing requirement. So if an individual has gross income or household income below the minimum filing threshold, so again, they would not have to file a federal tax return, they're automatically exempt from this provision. So again, they don't have to file a return to claim it, but if they do file a return anyway, for example somebody who might file to claim a refund of withholding, can claim an exemption for this when they filed a federal tax return.

The fifth bullet is for individuals who obtain the minimum essential coverage during the 2014 open enrollment period. So again, anybody that enrolled in insurance outside the marketplace or inside the marketplace and had coverage effective by May 1st of 2014, or they applied for coverage under the Children's Health Insurance Program, or they were in line and are treated as having enrolled in coverage through the marketplace by March 31st. So again, individuals who had gaps in coverage beginning in 2014 for any of those reasons qualify for an exemption.

And last but not least, individuals who reside in a state that did not extend Medicaid coverage, that had household income below 38 percent of the federal poverty line, qualify for an exemption.

So again, these are the exemptions that can be claimed directly on the federal tax return.

All right, so now you can see on this screen the exemptions that can only be obtained through an application to the marketplace. The first is the exemption for religious conscience. So an individual who is a member of a religious sect that is recognized by the Social Security Administration as being conscientiously opposed to accepting health insurance benefits can apply to the marketplace for an exemption.

Secondly, any individual who has suffered a hardship that made them unable to obtain coverage, as defined by HHS, can apply as well. Now, this could include but is not limited to homelessness, eviction, foreclosure, domestic violence, death of a close family member, or unpaid medical bills, for example. So again, those can only be obtained through the marketplace.

Now, there are certain hardship exemptions that can be claimed on the federal tax return, but again, you can check our chart on for a list of all the exemptions and where they can be obtained from.

Now, I did want to mention, while we're talking about exemptions from the marketplace, about the process. So again, if you go to you can see the application process and you can download a copy of the application. Once you fill out the paper application you mail that into the marketplace, and when it's processed they will assign an exemption certificate number for each exemption that's applied for. And the exemption certificate number, or ECN, if you will, is used to report the exemption on your tax return when you file.

Now, we'll show you how to do that in just a moment on Form 8965 where we'll talk about that, but I guess one of the things I did want to also mention is that because it's a paper application process for a marketplace exemption, we have created a process for taxpayers who have a pending application, and when they filed their federal tax return they'll be able to write the word "pending" on Form 8965 when they're reporting pending marketplace applications for exemptions.

All right, so we've talked about exemptions that can be obtained directly from the IRS, we've talked about some that can be obtained only through the marketplace, and here's a couple more that can be obtained either way. So the first is for members of an Indian -- recognized, federally recognized Indian tribe. Secondly is members of a health care sharing ministry. And a health care sharing ministry is a 501(c)(3) organization whose members share a common set of ethical or religious beliefs and have shared medical expenses in accordance with those beliefs since at least December 31st, 1999.

The third category are for American Indians, Alaska natives, spouses or descendents, who are eligible for services through an Indian Health Care Provider. So again, they don't have to be a direct member of the federally recognized tribe, but if they're able to access services through the Indian Health Care Provider they qualify for an exemption.

And last but not least, individuals who have been convicted and are serving a sentence in jail, prison, or similar penal institution or correctional facility can claim an incarceration exemption. So again, these exemptions can be obtained either way.

Now again, as I said earlier, unless you have to apply for an ECN from the marketplace, we recommend that you actually claim these directly on your federal tax return. It's a more efficient process to claim it on the return, rather than to apply on paper to the marketplace.

All right, so this is the new Form 8965, and it's used to report or claim health care coverage exemptions.

This form is submitted as an attachment to the federal tax return, and again, it's used to report ECNs for exemptions granted directly by the marketplace, or to claim exemptions with the IRS. Now, there's a little distinction there, in that the IRS does not grant exemptions. Taxpayers of course claim them directly on the return, and the IRS more verifies the process.

We'd like to emphasize that the IRS accepts requests for an exemption only at the time of filing. So again, we won't grant a coverage exemption by phone or correspondence, you have to file this form with your 1040 tax return to claim a coverage exemption.

Now, this form is used to claim exemptions for the entire tax household. You fill out -- file one of these forms that covers everybody on the return. So you, your spouse, and any dependents you claim on your tax return, you can use this form to claim exemptions.

It is a three-part form, and again for brevity we're not going to go over the form in detail today, but just in general, Part 1 is used to report marketplace exemptions, Part 2 is used to claim exemptions for income IRS.

below the filing threshold, and Part 3 of this form is used to claim coverage exemptions directly from the So a household could actually complete more than one part of the form, but this is the form used to claim all different types of coverage exemptions.

All right, so now we've talked about coverage, and we've talked about exemptions. So when would an individual need to make a payment. Well, as we've said earlier, if they don't have coverage and they don't have an exemption for any months during the year, they'll need to make a shared responsibility payment when they file their tax return. And as we showed you earlier, line 61 on the 1040 return is used to report shared responsibility payments. It's actually a line in the Other Taxes section. And on Form 1040A it's also a similar line on line 38, and on the Form 1040EZ, line 11. So again, it doesn't matter what type of tax return you're filing, you can still make a shared responsibility payment.

Now, we're going to show you in just a moment how to calculate a shared responsibility payment. And again, there's instructions and worksheets in the Form 8965 instructions that will walk you through the process.

All right. So again, we're going to go through kind of how that payment is calculated for individuals that don't have coverage or an exemption. And to begin the process, taxpayers again need to know what their tax household income is, and what their applicable income tax filing threshold is. Now, the good news is that using tax preparation software or the assistance of a tax professional greatly simplifies the calculation of the payment and completion of the form. So again, we like to encourage electronic filing for that reason.

So we're going to kind of walk through how this is done, knowing that most of you will probably be using software to accomplish these computations.

So to describe this, the payment, as simply as possible, it's the greater of either a percentage of income or a flat dollar amount. But the amount of the payment can never be more than the national average premium for bronze level coverage, for the cost of insurance.

So we're going to walk through each of these, and I'll get my little pointer here going. The first part again, the percentage of income amount, is the percentage of household income above the filing threshold for the primary filer or the joint filers in the family. And as you can see here, the percentage for 2014 is 1 percent. And the amount actually, as you can see, increases each year, because the 2 percent in 2015, 2.5 percent for 2016, and beyond. Okay? So now let's look at -- compare that percentage of income calculation against the flat dollar amount method. The flat dollar amount method is for one adult, it's $95 for 2014, and it's half that amount or 50 percent for individuals under 18.

And as you can see, just like the percentage of income, it goes up each year. So for 2015 it's $325 per adult. 2016, it's $695 per adult. Plus this one is actually increased based on cost of living adjustments each year after 2016. And again, for dependents under age 18, it's 50 percent of the adult amount, corresponding adult amount for each year.

Now, so one important bullet up here that I wanted to mention, so if you look at the second bullet at the top, for families, the maximum flat dollar amount calculation cannot exceed three times the adult flat dollar rate. So for 2014, three times $95, which is the flat dollar amount, equals 285. So it means that the flat dollar amount calculation can never exceed $285 for a household, regardless of family size.

Again, it can be less, but it can never be more than that.

So we've talked about calculating the payment based on a percentage of income, comparing it against the flat dollar amount calculation. And it would be the larger of those two, but it can never exceed -- as it says here in the third bullet -- can never exceed the national average bronze plan amount for the family size. Which again represents the cost of -- the lowest cost of insurance that's available through the marketplace.

Now, just to give you a sense, in 2014, the bronze plan amount for a single individual was $2,448, but it goes up to over $12,000 for a family of 5 or more members. So again, you'd have to look that up, or the software will do it when you do the comparison.

So again, just to recap, the amount of the payment is either a percentage of income, flat dollar amount, but it's capped at the national average bronze plan.

And again, these, by the way, are the annual figures. And it is prorated out per month. So for example, the $95 is for a year, so for an adult if -- you know, if they were uninsured and didn't have a coverage exemption for six months, it would be one half or 6/12ths of the amount per year, so it would be 47.50 for the year. So again, it's prorated out based on the number of months without insurance.

All right, so just wanted to recap quickly. Again, individuals either have to have minimum essential coverage or an exemption, or they're going to make a payment when they file their tax return. We showed you earlier the check box, so for taxpayers who had MEC or minimum essential coverage for the entire year for everybody in their household, all they had to do was check the box on line 61.

If they didn't have MEC all year and wanted to claim a coverage exemption, they use Form 8965 to request coverage exemptions from the IRS, or to report exemptions received from the marketplace.

And again, if they didn't have coverage or an exemption, they'll use the instructions -- they'll use the instructions for Form 8965, and the worksheets contained within them, to calculate the shared responsibility payment due. And that, again, also gets reported on line 61 of their tax return.

Now, one thing that's unique about a shared responsibility payment is that the IRS has a little bit of limited collection authority related to this provision. If a taxpayer is unable to pay this whole balance when they file their tax return they should contact us, because we routinely work with taxpayers who cannot pay an amount that they owe at the time of filing. We'll typically set up a payment plan or installment agreement.

Our limitations that I wanted to mention is that the IRS does not have authority to file a notice of lien or levy to collect this balance due from a shared responsibility payment, but we do have the ability to offset refunds or overpayments. So again, we'll reduce somebody's refund by the amount owed to collect the shared responsibility payment.

Okay, so again, to sum it up, the Form 1040, and as we showed you for example on line 61, is used to both report minimum essential coverage or a shared responsibility payment, or Form 8965 attached to the 1040 is used to report claimed coverage exemptions.

All right, so next we're going to talk about the premium tax credit. All right, so what is the premium tax credit. Well, it's a refundable tax credit, it's claimed on a new Form 8962. And to be eligible, again, an individual must have enrolled in insurance coverage through a federal or state Health Insurance Marketplace. It helps individuals and families with the cost of purchasing marketplace insurance, and their household income -- and again, we're going to talk about this later -- you know, typically has to be between 100 and 400 percent of the federal poverty line for their family size.

The credit amount is based on a sliding scale, and greater credit amounts are available to those with lower incomes. Some factors that affect the credit amount include which family members enroll, the cost of available insurance coverage, and the premiums for the plan that they enroll in, and their family size.

Again, as we mentioned earlier, that individuals purchasing insurance through the marketplace would -- well, again, they'd have to purchase insurance through the marketplace to be eligible for the credit. And at the time they enroll, they'll have an option to choose potentially advance payments of the credit.

Now, we're going to talk about advance payments on the next couple of slides, but these are an estimate of the marketplace on how much a taxpayer's premium tax credit will be, and taxpayers are given the option to get all of the benefit either when they file their tax return, or they can get some of it advanced by the marketplace directly to their insurance company before a return is filed. And in that situation, advance payments of the credit lower their out-of-pocket costs for premiums that they would have to pay each month.

The amount of advance payment is based on a person's projected household income for the upcoming year. Again, we've talked about the factors a moment ago. And because it's based on a projection, advance payments are likely to differ from the actual credit amount, which is based on the actual household income when the tax return is filed. So for this reason, the advance credit payments must be reconciled against the actual credit amount when the person files a federal tax return. We're going to talk about the form for doing that in just a moment, it's Form 8962.

Taxpayers can choose to forgo advance credit payments at the time they enroll, and if they forgo advance payments in effect it means that when they file their tax return they'll be reimbursed for a portion of the insurance premiums that they've already paid for. So again, taxpayers who receive advance payments must file a tax return to reconcile payments, and other individuals would still file the same form to claim the credit on their federal tax return.

This credit is refundable, as we said in the first bullet here, which means that it can either lower a balance due or it can create or increase the amount of a refund.

Let's see. Let's move on to the next slide. Talk about eligibility in a little bit more detail. So to get a premium tax credit, an individual must meet all of the following requirements: First and foremost, they or a family member must enroll in a qualified health plan at the marketplace for one and more months during the year. And again, they cannot -- those same individuals cannot be eligible for either employer or governmental insurance. And they must be lawfully present, and cannot be incarcerated during the year. So again, this credit is for individuals who purchase marketplace health insurance, and meet the other criteria.

Typically, they have to have household income between 100 and 400 percent of the federal poverty line based on their family size. And there are a few exceptions, we'll talk about those in a moment.

If they're married they have to file a joint tax return, with a few exceptions, and again, those exceptions would deal with victims of domestic abuse or spousal abandonment. And again, there's more information about that on our website.

And they cannot be claimed as a dependent by another person. Again, if they're being claimed as a dependent. A child cannot file, for example, on their own and claim a premium tax credit.

So -- oh, and of course as we mentioned earlier, the PTC pays a significant portion of marketplace premiums when somebody gets advance payments. But taxpayers do have to pay their copay premiums by the due date of the return for the coverage year for some of those same months to qualify for the credit.

All right, so let's go over some of the exceptions, right? So as we mentioned earlier, married individuals can't use married filing separate unless they meet the exception criteria that I already mentioned.

Certain married individuals may qualify to file as head of household. And again, for purposes of this credit, that means they're treated as unmarried. The bottom line here is that individuals who use the married filing separate status, but don't meet the exception criteria, are not allowed to claim a premium tax credit. And if in fact they did receive advance payments, those would have to be repaid subject to a potential repayment cap.

Now, as I mentioned earlier above, right, taxpayers have to have income between 100 and 400 percent of the federal poverty line. But if somebody enrolls at the marketplace and they estimated their income to be in that range, but at the end of the year their income fell below 100 percent of the federal poverty line at filing because of some type of, for example, a change in circumstance, they're still treated as an applicable taxpayer if they meet the other eligibility criteria.

In addition, certain individuals who had at least one family member who is an alien lawfully present in the U.S. but not eligible for Medicaid, they're treated as applicable taxpayers even if they have household income below 100 percent of the federal poverty line.

I guess a key point to remember on this slide, right, is that most people have insurance coverage, you know, or minimum essential coverage outside the marketplace through either their employers or other government sponsored plans, and they would not qualify for this credit. Again, this credit is only for taxpayers or their family members who enrolled in coverage through the marketplace, and again, are not eligible for other minimum essential coverage.

All right, so we've talked a little bit about the federal poverty lines, and we wanted to show you some examples on the screen. The federal poverty line amounts that are in effect on the first day of open enrollment are used for the entire coverage year. And they're also used to claim the federal tax -- I'm sorry, the premium tax credit when you're filing your return.

So that means that for -- the 2013 federal poverty line table was used to determine both advance credit payments during the enrollment period, and it was also used to determine the premium tax credit on the 2014 tax returns. You can see here that for 2014 tax year, for a single individual the range goes from $11,490, that's 100 percent of the federal poverty line, up to and including $45,960, which is 400 percent.

So you can see depending upon your family size, the range varies. The government recently began using the 2014 federal poverty line table for 2015 coverage.

All right. So again, individuals, families, who are again between these ranges, would qualify for the premium tax credit, as long as they met the other criteria.

All right, a few key considerations. Again, we mentioned earlier the advance payments of the premium tax credit that can be sent directly to a taxpayer's insurance company based on an estimate made, you know, with the marketplace, of the amount that they would be claiming on their return.

So again, during the enrollment process, the marketplace is going to estimate that based on the family size, the projected income, and information that's provided on the application at filing, you know, to show who is eligible for health coverage, and who would be purchasing insurance through the marketplace.

Because it's an estimate, the better the estimate and the faster that an insured adjusts the estimate, the likely that it will be -- or it increases the likelihood it will be closer to the amount that they're entitled to at tax filing. So again, we want to ensure that people report changes in circumstance as quickly as possible to the marketplace to minimize the impact of changes in the circumstance.

Now, when the marketplace estimates somebody's premium tax credit, their potential premium tax credit, it is up to the individual applicant to choose whether or not to receive the benefit of advance payments, and if so, how much.

Now, for individuals that do decide to receive the benefit of advance credit payments, a few key messages that we'd like to make sure that they're aware of, right? First, that advance credit payments are optional; that if they choose to receive advance credit payments that they must reconcile the advance payments against the actual credit when they file their tax return; and because the advance credit payments are based on an estimate, the differences between that estimate and the actual premium tax credit are likely. And again, changes in circumstances can affect the differences. And again, we want to ensure that taxpayers report those as quickly as possible.

Now, individuals are going to file a Form 8962 to claim the premium tax credit at the end of the year, and to reconcile advance payments of the premium tax credit. We'll be covering that form in just a few moments and -- you know, again, because we know that again, people are doing the best they can to estimate their eligibility at the time of enrollment, the law was written such that there are certain repayment limits or caps in place that might limit the amount somebody is required to pay back if they received excess advance payments.

Again, those repayment caps only apply to individuals or filers with income below 400 percent of the federal poverty line. And for a single individual, those repayment caps can range from 300 to $1260, depending upon where their income falls in the federal poverty line, or levels. And the amount for joint filers, or all other filers that are not single, are double the amount of single filers. So again, for a joint couple those ranges for example, repayment cap ranges, would go from $600 all the way up to $2500.

So again, the repayment caps are there to kind of limit the amount somebody might be required to pay back if they received excess advance payments, and their income, again, is less than 400 percent of the federal poverty line.

You can see on the screen here, actually the next two slides are going to just give you a little bit more detail on changes in circumstances, or the types of changes in circumstances that can, you know, affect somebody's eligibility or the amount of the premium tax credit that they'll be entitled to receive.

And again, the key message here is that reporting changes to the marketplace promptly allows the marketplace to adjust your advance credit payments. And again, doing so helps to prevent large differences between the amount of advance payments and the amount that you'll be able to claim on your tax return.

And again, allowing the marketplace to adjust those advance payments kind of can help avoid getting a smaller refund, or potentially owing money that you didn't expect to owe when you file your federal tax return. It's really a similar process to withholding or estimated tax payments. And again, you want to adjust those if there's a change.

I guess a key concept is that if you're receiving the benefit of advance payments of the premium tax credit, the greater the change and the longer time that you take to report it, the more significant the difference will be at the end of the year between the amount of advance payments and the actual credit.

So here you can see some examples of the types of changes in circumstances that should be reported to the marketplace, either online or by phone, to adjust advance credit payments. Some of these changes also open the door for marketplace special enrollment periods. And again, the marketplace can advise taxpayers as to their eligibility for those.

If there's a life change that qualifies somebody for a special enrollment period, they typically only have 60 days from the date of the life event to enroll in coverage.

Now again, I'm not going to read these all off, you can see them on the screen. But has information about changes in circumstances. We also have a complete list available in a Health Care Tax Tip on And there's a publication that the IRS produced, it's a flier, it's Publication 5152 titled Report Changes to the Marketplace if they Happen.

All right, so when somebody is getting ready to file to claim their premium tax credit, what types of documentation will they need. Well, the first form that I want to discuss is the Form 1095-A. So as you can see, Form 1095-A, it's the Health Insurance Marketplace Statement. Those forms are issued by January 31st each year following the year of coverage, and it shows the individuals who are enrolled in marketplace insurance; the premiums for the plan for themselves or their family members; it will show the second lowest cost silver plan, which is again used to calculate the credit; and it will show whether or not they received advance credit payments during the year.

This form is very similar to, say, a Form 1099 or a W-2 in that one copy of the form is filed with the IRS, and another copy is mailed to the individual.

So individuals for 2014 should have gotten this form by January 31st, and they would use the information here on Form 1095-A to compute the premium tax credit on their tax return, using Form 8962, and they would both calculate the credit and reconcile advance payments.

Now, if an individual did not receive a 1095-A from the marketplace, they should contact the marketplace to request a copy. It may be available through an online account, a look-up account, or again, they could contact them via phone. Again, go to for information about how to contact your marketplace.

This Form 1095-A, the data from this form is entered onto Form 8962, and taxpayers will actually only attach the Form 8962 to their return. So Form 1095-A does not get submitted.

Now, I did want to mention here that beginning with the 2015 coverage year, so we're talking about next January of 2016, certain employers, government insurance agents -- I'm sorry, government agencies, and insurance companies, will also be required to report non-marketplace coverage information. So again, starting next January, taxpayers who purchase coverage through the marketplace will get this Form 1095-A, but others may be receiving either a Form 1095-B from their insurance provider, or Form 1095-C from -- if they work for a large employer. So again, there would be different ways to report coverage next year.

So here's the form we've been discussing, right? Form 8962, to claim the premium tax credit. And as we mentioned, it's used to claim the credit regardless of whether advance payments were made, but also used to reconcile advance payments with the actual premium tax credit that's allowed on the return.

The Form 8962 will calculate the credit on a sliding scale, with the greater amount of the credit going to those with lower incomes. And it factors in household income, family size, and which covered family members -- or I'm sorry, which family members are enrolled in coverage.

The results of completing Form 8962, Premium Tax Credit Calculation, is that it will flow over to the Form 1040 return, and as a result there are two new lines in the Form 1040. So there's a line 69, which is for claiming a net premium tax credit. So again, individuals who reconciled advance payments and are due a refund. There is -- and there's line 46, in those situations where an individual received excess advance payments and had to repay back some of those.

So again, outcome of this form can either be a net credit on line 69 or potentially having to repay back a bit if they received excess advance payments, again on line 46.

This Form 8962 can be filed with Form 1040A or 1040 or Form 1040NR. It cannot be filed with a Form 1040EZ or a 1040-PR.

We also just wanted to mention Publication 974, Premium Tax Credit. It's a multi-paged publication for individuals who purchased coverage through the marketplace and are claiming the premium tax credit or reconciling advance payments. So again, a lot of good information and examples there, it's available on So again, all of our forms and publications are available on

Just a quick recap before we kind of get into the questions and answers. So the ACA or Affordable Care Act addresses health insurance coverage and financial assistance options for individuals, families, including the shared responsibility provision and the premium tax credit.

In general, taxpayers must have minimum essential coverage for each month to qualify for an exemption, or make a payment on their federal tax return when they file.

Again, individuals who want to claim coverage exemptions can either claim them on the tax return or they can apply for an exemption through the marketplace.

And any shared responsibility payment due is entered on line 61 in the Form 1040 tax return. And they'll use instructions in Form 8965 to figure the amount of a shared responsibility payment due.

The premium tax credit is calculated and the advance payments are reconciled on Form 8962.

Taxpayers will receive a Form 1095-A from the marketplace which will contain the information necessary to complete the form.

Only taxpayers whose family members are enrolled in coverage through the marketplace are allowed a premium tax credit, assuming they meet the eligibility criteria. And again, this credit is used to reduce the cost of monthly premiums.

Taxpayers who choose to forgo advance payments will get the full benefit of the credit when they file their return. And again, if they received advanced payments they'll have to reconcile those.

Here's a slide that just shows the two primary web resources for the Affordable Care Act. contains the information related to the tax provisions included in the Act. So again, you can visit that page or those pages for information about these provisions, including Frequently Asked Questions, and all the topics we've just covered., on the right, contains information on health coverage enrollment through the marketplaces, how to get appropriate financial assistance, including advance payments. And again, there's many FAQs, as well, on

So Catherine, I think we've run through all the slides, and do we have any questions that have come in through the chat box?

>> Yes, we do, Bill, we have a few questions. I'll start with the shared responsibility provision questions.

>> Okay.

>> First question is: Most of my family has insurance, but I'm claiming a dependent that does not.

What forms do I need to file, and can I check the box.

>> All right, let me jump back to slide 8, I think that's the one that had the check box on it. So again, you can only check the box on line 61 if everyone in the household had coverage for the entire year. So in the question that you just read, the fact that one dependent did not have coverage means that you cannot check the box.

Again, if the dependent qualified for a coverage exemption, they would claim the exemption by attaching a Form 8965, to claim a health care coverage exemption. Or again, if they did not qualify for an exemption for each month they did not have insurance, you would calculate a shared responsibility payment using the Form 8965 instructions. And you actually report the amount that was due on line 61 there in the dollar or the entry field to the right.

>> Thank you. Here's question number 2, about exemptions: I'm not sure what exemption I qualify for, and how to claim it.

>> Okay. Well, as I mentioned earlier, and I know we had several slides that talked about the different types of exemptions. But I would suggest if you go to, there's a dedicated page that has information on coverage exemptions, including a chart of all the different types of exemptions and then, again, how they can be obtained. Whether it's you can file for it directly on the tax return, or whether you have to go to the marketplace.

The same table, by the way, is in the Form 8965 instructions. So again, either go online to the website or go to the 8965 instructions to see what all the different types of exemptions are, covered exemptions are, and how to claim them.

>> Thank you. Question number three: I think I need to make a shared responsibility payment, but I'm not sure. What should I do?

>> Well, again, Form 8965 instructions will kind of walk through the process. And again, since we're looking at this particular slide, again, I'm just going to recap. If you or everyone in your household had coverage for the entire year, all you have to do is check the check box. You don't have to make a payment, right? Again, you only would be required to make a payment if you or someone you claim on your return did not have coverage and did not qualify for an exemption.

And again, to claim an exemption you'd use Form 8965. But if you for any month you didn't have either coverage or an exemption for that month, you would have to make a payment for that month. And again, you'd use the instructions and worksheets in Form 8965 to determine the amount of the payment, and you would report it here on line 61.

>> Thank you. The last question about shared responsibility provision: I just found out I'm going to owe a shared responsibility payment for 2014. How do I avoid having to pay that next year?

>> Well, that's a great question, right? So looking back, they owed a payment because they had at least one or more months in 2014 that they didn't have insurance or qualify for an exemption.

So looking forward in 2015, again, unless you know you're going to qualify for an exemption -- and again, you can look at Form 8965 instructions or our website to see if you fit one of the exemptions criteria. But if you don't, then obviously you'd want to enroll in coverage. Because again, you won't owe a payment if you either have coverage or qualify for an exemption.

And if you're not offered insurance through your employer, and you meet the criteria that we mentioned earlier -- or not, even -- you should contact the marketplace. Go to and check out your insurance options. And they can assist you in either enrolling in insurance or tell you what your options are.

>> Thank you. How do I know if I qualify for the premium tax credit?

>> Okay let's see, that was -- let me move forward to that slide, just to recap. To qualify for the premium tax credit, again, remember, this credit is only available for those individuals who purchased marketplace insurance. So just looking at the bullets here, right? You know, you can only purchase marketplace insurance if you don't have an offer of affordable coverage through your employer and you don't qualify for government insurance.

So again, if you purchase insurance through the marketplace, because you weren't eligible for affordable coverage, and your income is going to be -- or you project your income to be between 100 and 400 percent of the federal poverty line, you know, again, you would typically be eligible for the credit.

So you can see the criteria here. And again, Form 8962, the instructions have the eligibility criteria, as well. And I think we've showed you -- let's see, what was that -- we showed you Publication 974. Again, move forward on the slide just to show you. Again, Publication 974 will help somebody determine if they're eligible or not.

>> Next question: What should I do if I have not received my Form 1095-A from the marketplace?

>> Well, you should contact the marketplace to inquire -- again, assuming it's after January 31st for the year that you're expecting the form -- you should contact the marketplace to inquire as to the status.

If you purchased marketplace -- I'm sorry, if you purchased insurance through the federal marketplace, and perhaps in some of the state-based marketplaces, you may be able to log into your online health care account to obtain a copy of it. Otherwise, you could phone your marketplace and request a copy.

Again, go to for information on how to contact the marketplace to get assistance with either getting your Form 1095-A, or if there's an error on your form that needs to be corrected, again, they would be the ones to assist you with that.

>> Okay. Will I have to file a Federal Income Tax Return to get the premium tax credit?

>> Yes, you do have to file a Form 8962 -- and let me put that up on the screen. Should show up in a second, sorry about the delay. Form 8962 must be filed with your federal tax return to claim the premium tax credit.

This is required, by the way, if you received advance payments. You have to file a Form 8962 to reconcile advance payments. But even if you didn't receive advance payments, to get the credit you have to attach Form 8962 to your 1040 tax return when you file.

>> Thank you. And now our last question: If I have questions or need help, where do I go?

>> Oh. Well again, the best way to get help or to get your questions answered is to go to one of these two websites. So has all the information that you'd need to know about the tax provisions that we covered today. And again, if you needed assistance or had questions about enrollment or advance payments, you can go to, as well.

And again, all of our tax forms and instructions and publications are available on our website, which is our home page.

So again, I think that's the best -- that's the best source. You could also call us, but again, most people can get their questions answered more quickly and more efficiently online.

>> Thank you again, Bill, for your presentation. And thank you all for attending today's broadcast.

>> Thank you, Catherine. Thank you, everybody.