By Briana Vannozzi
You signed up. You got your health insurance. And now it’s time to file.
“For the average person, it can get very confusing very fast because it’s not only new forms, that form triggers additional forms. Whether you’re going to get a credit or if you’re going to have to face a penalty and may need an exemption,” said H&R Block Senior Tax Advisor Sheryl Forst.
For the majority of Americans filing a tax return, they’ll simply check a box on their tax forms indicating they had coverage for the year. Not so for marketplace enrollees.
“For you, you’re going to get a new form called a 1095-A,” said Forst. “Once you get that form, that form tells us how much credit you did get and how much coverage you had. And that’s what we have to report back to the federal government.”
Forst explains taxpayers will have to ante up with the IRS.
“When they went and got that insurance they had to tell the government what they thought their income would be. They estimated it. Now we have to sit down and say this is what our actual income is,” she said.
Here’s where it can gets a little complicated. After tax payers fill out the 1095-A form, they’ll then take that information and fill out yet another — an 8962 — which reconcile any tax credits they may have received.
“So for that group, they have two options. They either overestimated their income and now for them they may not be entitled to all of that tax credit and they may have to pay back part of it,” Forst said.
Or they underestimated. In which case, they’ll get a refund. If you still don’t have insurance, expect a fine. It’s $95 per adult, $47.50 per child. Or 1 percent of your income above your filing requirement, whichever is greater.
Here’s an example. “Married couple, $65,000, one doesn’t have insurance. You would think, ‘Oh my penalty is only $95’ when in fact when we do the comparison, their penalty is $450. So it can be a game changer on the tax return,” Forst said.
And yet another form, the 8965, will be waiting in the wings for taxpayers looking to file an exemption. Despite all the paperwork, many policy experts are on board with the changes.
“It’s a reasonable way to implement the health insurance requirement, certainly better than putting a whole new system in place,” said Joel Cantor, director for the Center for State Health Policy at Rutgers University.
“This year the penalty is $95 or 1 percent of your income. Next year it jumps to a staggering $325 per person or 2 percent of your income — very big jump. It’s a lot of money,” Forst said.
“We want to make sure that the consumer, that the tax payer, has the information they need to properly fill out their tax return. So we have begun a robust outreach and educational campaign throughout the country with our partners the IRS, with the White House leading the campaign,” said U.S. Department of Health and Human Services Region II Executive Officer Dennis Gonzalez.
Tax advisors have taken training courses on the health law. Even though they’re prepared, their best advice — don’t wait until the last minute on April 15 to get your documents filed.