The Affordable Care Act, often referred to as Obamacare or the ACA, requires most Americans to have health insurance coverage. Those without coverage must pay a penalty when they file their taxes. According to the U.S. Department of Veterans Affairs, VA health benefits count as medical coverage under the ACA.
The article below is accurate for your 2017 taxes, the one that you file this year by the April 2018 deadline, including a few retroactive changes due to the passing of tax reform. Some tax information below will change next year for your 2018 taxes, but won’t impact you this year. Learn more about tax reform here.
Minimum essential coverage
The ACA is built around a requirement that everyone either obtain health insurance or qualify for an exemption from the law. Otherwise, a penalty applies, due when you pay your income taxes. The law requires that health plans provide a certain basic level of care, referred to as minimum essential coverage. So long as your health plan provides this level of care, you're all set and meet the requirements of Obamacare.
VA coverage that qualifies
The Department of Veterans Affairs says that your benefits meet the standards of the Affordable Care Act if you are enrolled in one of the following programs:
- The standard veterans' health care program
- The Civilian Health and Medical Program, commonly called CHAMPVA, covers certain spouses and children of service members
- VA Spina Bifida Health Care Program covers certain veterans' children who are living with spina bifida
- The Tricare program for active-duty service members and their families also meet the standards of the law
Enrollees in these programs will not have to pay the penalty fee when filing their taxes, because these plans meet the minimum essential coverage requirement.
No further action required
Veterans and others receiving qualifying VA health benefits do not have to do anything further to comply with the law. The Affordable Care Act requires health insurers and other coverage sources, including the VA, to provide policyholders or beneficiaries with any documentation needed for reporting their coverage when filing their taxes.
Other ways to qualify for minimum essential coverage
Veterans and their families who aren't enrolled in a VA-backed health plan may still have qualifying coverage. Nearly all employer-sponsored health plans meet the Affordable Care Act's standards for minimum essential coverage, as do government programs such as Medicare, Medicaid and the Children's Health Insurance Program.
Coverage purchased through the online exchanges set up under ACA also qualify, as do many individual policies bought directly from insurers. Your plan provider can tell you whether your coverage qualifies.
Finally, you may be able to avoid paying a fee with your taxes if you qualify for an exemption to the coverage requirement. Exemptions are allowed for, among other things, people with one of the following:
- Incomes below the tax-filing minimum
- People who can't find affordable coverage
- Members of federally-recognized Indian tribes
- People who go without coverage for less than three months
- People with religious objections to any health insurance
Not sure if you are exempt from the tax penalty or from the requirement to purchase health insurance? The TurboTax Exemption Check, is a free, online tool to help determine whether you might be eligible to waive the tax penalty entirely and apply for a health care exemption.
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