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Feds to Taxpayers: Did You Get Health Insurance?

Image: U.S. 1040A Individual Income Tax form is seen at a U.S. Post office in New York

This year, you'll have to tell the IRS whether you have health insurance. Mike Segar / Reuters

Two to 4 percent of taxpayers will end up paying a fine because they didn’t have health insurance last year, federal health officials predicted Wednesday.

This is the first year that Americans will have to worry about health insurance at tax time. The 2010 Affordable Care Act requires that just about everyone have health insurance or else pay a fee in the form of some extra income tax.

Most taxpayers — about 75 percent — already do, according to the Health and Human Services department. They will just check a box on their 2014 tax returns to say they did have coverage.

"The only change the vast majority of people will notice is the requirement to check a box to indicate that they had health insurance."

“When it comes to health care and taxes, the only change the vast majority of people will notice is the requirement to check a box to indicate that they had health insurance all year through their job, Medicare, Medicaid, Tricare or the Veterans Affairs,” HHS Secretary Sylvia Burwell said in a statement.

“A fraction of taxpayers will take different steps, like claiming an exemption if they could not afford insurance or ensuring they received the correct amount of financial assistance. A smaller fraction of taxpayers will pay a fee if they made a choice to not obtain coverage they could afford,” Treasury Secretary Jacob Lew added.

People without health insurance are supposed to have gotten commercial health insurance through the new online marketplaces called exchanges, or by independently buying health insurance. They opened for the first time in the fall of 2014 for coverage that started a year ago. Open enrollment is under way now for coverage starting in 2015 and people have until Feb. 15 to get covered on Healthcare.gov or through their state’s system.

"A smaller fraction of taxpayers will pay a fee if they made a choice to not obtain coverage."

The marketplaces are a place for people to get federal subsidies to help pay their premiums. HHS estimates that 3 to 5 percent of people who bought insurance on the exchanges and who got a subsidy received the money in the form of a tax credit up front. They would have had to estimate their 2014 earnings and now crunch time will come when they have to show their actual earnings on an Internal Revenue Service (IRS) tax form.

Tax and HHS officials say they estimate that 10 to 20 percent of Americans who didn’t get health insurance for all or part of last year will be exempt from the tax. They’ll include people living in states that didn’t expand Medicaid, the joint state-federal health insurance plan for people with low incomes.

HHS and the IRS say they are working with commercial and non-profit tax preparers to help them get it right for customers. They include H&R Block, FileYourTaxes.com, Jackson Hewitt, Liberty Tax Service, the AARP, TurboTax and the National Women’s Law Center.

Tax time! What you should know 1:48

The minimum fee this year for people who didn’t get health insurance is $95 per person but it can be as much as 1 percent of household income.

About 150 million Americans are expected to file federal tax returns this year. HHS estimates 9.5 million people have signed up for "Obamacare" for 2015.