When you file your federal income tax return you will be asked if you had health insurance. If you didn't have insurance for three months or more during the 2018 tax year, you may owe a penalty. For more information about the penalty, visit our page on Health Insurance, Taxes and You.
There is no penalty for the 2019 tax year (for which you file taxes in early 2020) or later. That means if you do not have insurance from January - December 2019, you will not have a tax penalty.
Paying Back Some of the Credit
The IRS may ask you to pay back some of the financial help that you got from Vermont Health Connect if one of the following is true:
- You received too much Advance Premium Tax Credit (APTC).
During the year, Vermont Health Connect gives you financial assistance called an Advance Premium Tax Credit (APTC) each month to help pay your premium. It is based on what you expect your income will be and the number of people in your tax household. Your tax household includes you, your spouse (if you file jointly), and any dependents. When you file your tax return, you report your income and calculate your final Premium Tax Credit on your tax return. This is called “reconciliation.”
When you do your taxes, your income or tax household may be different than you expected. Or, you might not be eligible for the Premium Tax Credit for another reason. If you got too much APTC, you will have to pay back all or some of it when you file your taxes.
- You received APTC in a month that you did not pay your premium.
If your plan closed for non-payment during the year, you will have to pay back the APTC on your taxes for your last month of coverage.
You can avoid paying back this APTC if you pay Vermont Health Connect the premium that you owe before the tax filing deadline. To do this, you ask Vermont Health Connect to issue a new tax Form 1095-A.
Example: Bob started on a Vermont Health Connect plan on January 1. He received $200 a month in APTC to help pay for the plan. His monthly bill was $300. Bob, however, did not pay his $300 bill for May coverage. Ultimately, his plan was terminated for non-payment on May 31st.
Bob needs to pay the $300 monthly bill before the tax filing deadline.
If he does not make the $300 payment before the tax filing deadline, he will still owe the $300 to his insurance company AND he will have to pay the $200 that he received in APTC that month back to the IRS.
You should not have to pay back more than one month of APTC if your plan closed for non-payment. If your Form 1095-A shows more than one month with APTC and no premium (see the image), please contact us at the Office of the Health Care Advocate.
Go to our Health Insurance, Taxes and You web page to find out more about these important tax issues.
This can get complicated. If you have questions, please contact us at the Office of the Health Care Advocate by filling in this form or calling 1-800-917-7787. There is no charge for our help.