OK – not so user-friendly. In the spirit of tax forms everywhere, the new forms for filing are equal in complexity to the law that they were invented to enforce. The good news – once we tax preparers figured them out, they’re really not so bad.
Here’s what the Affordable Care Act means as you file your 2014 tax returns.
1. If you have health insurance from any source other than the Marketplace (healthcare.gov), all you have to do is check a box. Done.
2. If you have health insurance through the Marketplace, the Marketplace sends you a form 1095-A.
3. If you did not have health insurance, your Shared Responsibility Payment (SRP) will be calculated on a worksheet that accompanies form 8965 of your tax return. The SRP is calculated on a monthly basis for each month you or any of your dependents did not have health insurance.
But wait! There are a number of exemptions to the requirement for health insurance. If you or any of your dependents qualify for an exemption, it is recorded on form 8965. If your income is below the level for filing income taxes, or if your income is below 138% of the federal poverty level in a state that didn’t expand Medicaid, you qualify. You also qualify if your coverage gap is fewer than three months, or if your coverage gap is a result of the less-than-stellar initial rollout of healthcare.gov. The full list of exemptions and their codes can be found at http://www.irs.gov/pub/irs-pdf/i8965.pdf. Note that this list of exemptions applies only to your 2014 return; the exemptions and the process for qualifying for exemptions are expected to change for the 2015 tax season. The SRP is expected to go up for the 2015 tax season.
This year’s tax season has been eye-opening to me as a preparer as well as to our clients. Some, who knew last year that they were too poor to qualify for subsidies on the marketplace, were relieved that they would be granted an exemption while our state legislature makes decisions on dealing with the coverage gap from not expanding Medicaid. Some clients found out during our tax preparation session that they would be assessed the Shared Responsibility Payment this year and next year, and that they were too late to enroll for 2015 coverage, as open enrollment closed on February 15.
Will Utah implement a program to cover the uninsured that are too poor for healthcare.gov but too wealthy for Medicaid as it currently exists. Will the federal government extend the open enrollment period for healthcare.gov to make it align with tax season? The adventure continues…