Open Enrollment Period is the period of the year in which US citizens can enroll in a health insurance plan. The enrollment period for calendar year 2016, is November 1, 2015, to January 31, 2016. Failure to enroll, also as minimum essential coverage (MEC) during this period, may result in a penalty. Exceptions may apply if the insured qualifies for the Special Enrollment Period, or else they are not eligible to enroll for a health insurance plan in 2016. Let us take a look at three important tax considerations one must pay heed to at the time of marketplace open enrollment.
Advance Credit Payments
Individuals or families eligible for Advance Premium Tax Credit can lower their monthly insurance premiums by using part or all of their estimated credit. The amount that one saves, by using tax credits, is known as advance credit payment or advance payment of premium tax credit. To find out whether you are eligible for advance premium tax credit, you need to visit the official website of IRS.
Even if you are not required to file a return, it is important for you to file it if you receive advance credit payment benefit. You must do so to reconcile the amount of your actual premium tax credit with the advance payment tax credit made on your behalf to pay your Insurance premium. In case the advance payment tax credit is more than the actual premium tax credit you are eligible for, you would be required to repay the excess at the time of filing returns.
Premium Tax Credit
In addition to advance credit payment, premium tax credit is another solution to lower insurance premiums. If you do not claim advance premium tax credit, you can claim a deduction of an equivalent amount from your tax liability, at the time of filing tax returns. Therefore, premium tax credit helps you to lower tax liability or increase the refund that you receive from the IRS.
A Word of Advice
Make sure you provide all the necessary information to the Marketplace that is required to estimate your credit. The information you’re required to furnish includes your projected household income, information about your family composition, whether the ones you are enrolling are eligible for other non-marketplace coverage, and more. If you fail to or intentionally, provide information that is incorrect or misleading, you may receive a notice from the IRS. Having detailed information will ensure accuracy and streamline your experience.