FAQ: Immigrants, Taxes, and the Affordable Care Act

Immigrants, Taxes, and the Affordable Care Act

Last updated NOVEMBER 1, 2016

To download the FAQ, click on the PDF icon, above right.

The Patient Protection and Affordable Care Act (ACA) established health insurance marketplaces to make it easier for people to buy health insurance, and it provides for income-based subsidies to make insurance more affordable for the people who buy it. The ACA requires that all United States citizens and lawfully present noncitizens either be covered by health insurance or pay a financial penalty.[1] There are some exceptions to this requirement,[2] which is often called the “individual mandate.” For example, people who are not lawfully present, have an income below the tax-filing threshold, or cannot afford to buy health insurance, even with subsidies, are not required to have health insurance.

Several aspects of ACA implementation relate to the filing of taxes. Federal tax returns are used to verify income and determine eligibility for subsidies, which are provided in the form of tax credits applied to monthly premium costs. Income-eligibility for this premium tax credit is calculated based on the tax household’s income from the most recent tax year. Any under- or over-payment of subsidies is reconciled on the following year’s tax return. Federal tax returns are also used to report health insurance coverage or to claim an exemption from the individual mandate, and to assess a tax penalty if the person does not have health insurance and does not qualify for an exemption from the mandate.

This FAQ explores tax-related ACA issues that are of particular concern to immigrants and their families.

To download the FAQ, click on the PDF icon, above right.


[1] For a list of categories of people who are “lawfully present” and eligible for coverage under the ACA, see www.nilc.org/lawfullypresent/. Note that, while immigrants granted deferred action are eligible for coverage under the ACA, those who have been granted this relief specifically through the Deferred Action for Childhood Arrivals (DACA) program are excluded from coverage. See www.nilc.org/acadacafaq/.

[2] For a complete list of exemptions, see https://www.healthcare.gov/fees-exemptions/exemptions-from-the-fee/.