Original Article | Sarasota Herald-Tribune
This past December, Sarasota resident Allison Ward Moore was scrambling to buy insurance coverage for 2015.
For a list of United Way’s free tax preparation sites in the region, visit unitedwaysuncoast.org or call (941) 308-4357
While she is satisfied with her Blue Cross/Blue Shield policy, this year’s requirement that she verify her coverage on her 2014 taxes is yet another hoop she is having to jump through in an already complicated tax environment.
“Health insurance just added another layer of confusion to the tax process,” said Ward Moore, who is self-employed. “You don’t have a benefits manager to help you, so you have to shepherd your own needs through the litany of tax requirements.”
This year marks the first time the Affordable Care Act has affected tax season, and for those opting to ignore the law and go without, penalties are meted out through the tax code.
By April 15, every tax filer in the U.S. will have to verify that he or she had health coverage in 2014, claim an exemption for not having it, or pay a penalty.
It is the most significant tax code change in recent memory, said Anita Ackerman, an Internal Revenue Service-certified acceptance agent at an H&R Block office in Sarasota County — especially for those used to filling out the tax forms themselves.
“There were several changes in 2007 with the federal stimulus, but this is bigger because it affects everyone,” Ackerman said. “Everyone has to be aware of the rules, and especially for people who’ve filed a simple 1040EZ tax from in the past, they’ve got a complicated new section to navigate.”
Experts say tax filers will fall into four groups: people insured through their employer or a government insurer such as Medicare and Medicaid; those who bought plans on the federal health exchange; people exempt from the requirement to purchase insurance because of hardship; and individuals who chose not to have coverage.
Each group will face different requirements in preparing their 2014 taxes.
Through employer or government In this category
In this category — roughly three-quarters of Americans, according to the U.S. Department of Health and Human Services — filers will simply check a box on their tax forms verifying they were covered. They will not receive any new forms in the mail and will not be required to fill out new forms when they file their 2014 tax returns, according to HHS officials.
Through health exchange
Those who purchased 2014 insurance coverage in the health exchange marketplace — more than 14,000 in Sarasota County and more than 10,000 in Manatee — will fill out a new form.
In the coming days, all marketplace consumers will get a new statement from the health exchange — Form 1095-A — that will include information needed to file their returns.
Similar to a W-2 form, the new form will include the income estimated for last year’s tax credits. That information will then go onto another new tax form called Form 8962, or the “premium tax credit” form.
That form looks at how much each person took in advance payments to help them afford their monthly insurance premiums, and compares that to the final premium tax credit for which the consumer qualified.
Consumers will then see if they overpaid on monthly insurance premiums and get a refund, or if they underpaid, they will have to pay the full amount owed.
Exempted by hardship
In another group are people who, even with the Affordable Care Act, could not afford insurance in 2014. In Florida, there were 850,000 such consumers who earned too much to qualify for Medicaid insurance but too little for insurance subsidies.
In Sarasota, at least 22,000 residents fall in this gap, county health department officials say.
Florida has, to date, rejected the Affordable Care Act’s directive to expand Medicaid insurance to people earning between 100 percent and 138 percent of the federal poverty level, or $11,490 to $13,075 for a single adult and $23,550 to $26,799 for a family of four.
While those people went without coverage in 2014, they pay no penalty.
This fourth group, however, will face fines. They were eligible for health coverage, but chose to go without in 2014. Under the Affordable Care Act, they face penalties of $95 per adult and $47.50 per child, or 1 percent of yearly household income — whichever is higher. Already, tax filers are seeing fines upward of $400 in some cases.
It’s not too late
Officials say it’s not too late to secure coverage for 2015, when tax penalties for going without health insurance will rise to $325 per adult and $162.50 per child, or 2 percent of annual income, whichever is higher.
At H&R Block and free tax prep sites sponsored by the United Way, advisers direct people to the insurance marketplace. Enrollment for 2015 coverage is open until Sunday.
“We’re trying to be proactive, and when taxpayers ask for an appointment, the first question we ask is whether they have insurance, and we’re directing them to open enrollment if they don’t already have coverage for 2015,” H&R Block’s Ackerman said.
Holly Bullard, manager of United Way Suncoast’s volunteer income tax assistance program, said she anticipates many clients will qualify for exemptions from the penalty.
The group opened free tax preparation sites in Sarasota County in January for residents with incomes below $60,000.
Because of the new health care section of the tax code, Bullard says she expects more traffic at their events, which are scheduled throughout the region until April 15, the deadline to file federal taxes for 2014.
As for Ward Moore, the new health insurance section is spurring her to start earlier on her taxes.
“This is new territory,” she said, “and having to prove you’ve got health insurance on your taxes is yet another layer of complexity.”