Ever since my colleague Amy Bushatz wrote about Tricare users needing to tick the correct box on their 2014 federal income tax forms to reflect that fact that they have Tricare health insurance, her mailbox has been out of control with questions on how to do this.
The new Affordable Care Act has a provision that penalizes taxpayers who do not have health insurance and choose not to purchase health insurance via the new health care exchanges. These penalties are happening via the federal income tax return. If you have qualified health insurance, then you show that on your tax return. Unfortunately, the line is small, the labelling is poor, and the instructions are slim.
There are three versions of the basic 1040 federal income tax return: the 1040EZ, the 1040A, and the regular 1040. Each has a different level of complexity and lets people include more information to reflect different tax situations. Each one has a line where you state that you have health care coverage, but it is a different line for each form. Fortunately, it is not nearly as difficult as it looks. Each form has a line that says Health Care: individual responsibility (see instructions), and then the words Full-year coverage and then a box. IF you had an acceptable forms of Tricare for the entire 2014 calendar and tax year, then you just check the box and you are done.
Tricare coverage that meets the requirement of minimum essential coverage includes:
- Tricare for Life,
- Remote, and
- Uniformed Services Family Health Plan, and also
- Tricare Young Adult,
- Tricare Reserve Select, and
- Tricare Retired Reserve.
Minimum required coverage is also provided by the Department of Veterans Affairs (VA) to those who are enrolled with the VA for health care, and for those who are enrolled in the Civilian Health and Medical Program of the VA (CHAMPVA.)
If you file the 1040EZ, the health care question is located on Line 11 of the form. If your spouse (if applicable) and you were both covered by acceptable Tricare health insurance (as listed above) for the entire 2014 calendar year, then you can check the box and continue. Easy!
The form 1040A form poses the health care question on line 38, on page two of the form. If everyone claimed on this tax form was eligible for acceptable Tricare coverages (as listed above) for the entire 2014 calendar year, then tick the box and move on to the rest of the form.
Please be sure that you understand that you are indicating that every member covered by the tax form has had eligible coverage for the entire year. This question is only likely to get complicated if you have dependent parents, or if you have a strange situation where your spouse and children don’t have Tricare because you have never enrolled them in the Defense Enrollment Eligibility Reporting System (DEERS).
The forms may get more complicated, but indicating that you have health care coverage doesn’t get any harder. On the Form 1040, health care identification occurs on line 61, on page two. As with the forms listed above, if everyone represented on this tax form has been covered by qualified Tricare health coverage for the entire 2014 calendar year, your only responsibility is to put a check in the box and continue on with the form.
Now, if you were not covered by Tricare or other minimum essential coverage for the entire 2014 calendar year, or if you have some family members who were not covered, then you have an entirely different set of questions. I encourage you to go to the IRS website and do some reading, or enlist the assistance of a qualified tax person to help ensure that you complete this new portion of the tax return properly.
If any of this is unclear, please let me know and I will try to help!