Does Health Insurance Matter When Filing Taxes?

If you bought coverage through the Health Insurance Marketplace and received advance premium tax credits, you generally must file a federal tax return and use Form 8962 to reconcile those payments with the credit you qualify for based on your final household income and family size. Your Marketplace should provide Form 1095-A with the information you need; review it for accuracy and contact the Marketplace if you find an error before filing.

If you did not take advance payments but are eligible for the premium tax credit, you may be able to claim it when you file using Form 8962. A change in income, marriage, or the arrival of a baby can affect the calculation, so report household changes to the Marketplace during the year rather than waiting until tax season.

Employer-sponsored health insurance does not automatically mean you owe more federal tax, and premiums paid through payroll on a pretax basis generally cannot also be claimed as an itemized medical expense. You may receive Form 1095-C or another coverage statement, but you generally do not need to attach it to your federal return; keep it with your records.

If you itemize deductions, eligible medical expenses that exceed 7.5% of your adjusted gross income may be deductible, subject to IRS rules. Some self-employed people may qualify for a separate health insurance deduction, so consider your work and coverage situation when deciding which provisions apply.

There is no federal tax penalty for going without health insurance for tax years beginning in 2019 or later, but some states and the District of Columbia have their own coverage requirements or penalties. Check the rules where you live, including any available exemptions, because your state return may require information that your federal return does not.

Having a baby can change your household size and may give you a special enrollment opportunity, so review your coverage options promptly and update your Marketplace application if applicable. Our baby health insurance enrollment checklist can help you plan, and our digital guide, Baby Health Insurance Made Simple, offers a resource for new parents navigating baby health insurance.