The Affordable Care Act brings important changes to parents with respect to obtaining health care coverage for themselves and their children. These changes are especially important to parents who share joint custody.
Beginning in 2014, all individuals are required to carry minimum essential health coverage for themselves and their “dependents”. The parent who claims the exemption for the child on the tax return has the “dependent”, not necessarily the custodial parent. Failure to provide such coverage may subject the parent claiming the exemption to a penalty when filing their taxes.
The penalty for not maintaining sufficient coverage is:
- 2014: $95 per adult or 1% of yearly household income, whichever is greater
- 2015: $325 per adult or 2% of yearly household income, whichever is greater
- 2016: $695 per adult or 2.5% of yearly household income, whichever is greater
The additional penalty for an uninsured child under age 18 is half of the penalty for an uninsured adult.
Exemption from the penalty may be available to individuals:
- With religious exemptions;
- Who are incarcerated;
- Who are not situated in the United States;
- For whom coverage exceeds 8% (in 2014) of their household income;
- With income below the tax filing threshold:
- Who are members of Indian tribes;
- With short coverage gaps (less than 3 months); or
- Experiencing qualifying hardships with respect to the capability to obtain coverage under a qualified health plan.
What do these Affordable Care Act changes mean for parents who share joint custody? It means communication and cooperation are even more important to co-parenting than they were before.
Many parents who share joint custody also share the tax exemption. Parents sometimes alternate who will claim the exemption each year. Sometimes they split exemptions for multiple children. However, it’s very uncommon for parents to alternate who will provide health care coverage for the children from year to year.
Therefore, it now becomes critical that parents share proof of insurance information with each other. Failure to provide coverage or proof of insurance may subject the parent claiming the exemption to a penalty when filing their taxes.
If you have legal questions about how the Affordable Care Act affects your joint custody or child support, you should consult with legal counsel in the state in which you reside.
Lisa Fiance, Esq. is a licensed California attorney, formally trained mediator, and the owner of Epiphany ADR. The information contained in this article is intended as general information and does not constitute legal or tax advice.