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As the Obamacare sign up season ended, some Democrats are concerned that there might be a kerfuffle at tax time when taxpayers who opted not to have health insurance coverage last year learn they have to pay a penalty-tax-fee. The penalty is officially called the “shared responsibility payment”.
Three Democrat officials have appealed to the Obama Administration to offer a special enrollment period at tax filing time.
This is the first year the penalty is levied. The penalty for the 2014 tax year is relatively cheap in order to transition Obamacare into American life. However, next year and in subsequent years, the penalty goes up swiftly. This is why some lawmakers are concerned, because the open enrollment period has ended, and those who still don’t have insurance will face steeper fines.
For not having health insurance last year, the fine is $95 per person or 1 percent of household income above the threshold for filing taxes, whichever is greater. But the fine increase to $325 per person or 2 percent of household income to be collected next year, for those who opted not to enroll in Obamacare or have health insurance at all.
This of course would be one of many tweaks to the law since it was passed in 2010. What Democrats are particularly worried about is the fallout of a massive tax penalty in 2016 — when the Presidential election campaigns are in full swing. The backlash is certain to be harsher next year, and even more so beyond, and the health law will be harder to defend and justify. According to government estimates, the average fine will be about $1,100.”
The White House remains uncommitted as to whether it will enact a small filing season around April 15th or consider having open enrollment next year be shifted or extended to include some or all of the tax season. Of course they’ll do whatever it takes to mask the consequences of Obamacare’s policies, again and again and again. If it was such a great piece of legislation, it should be able to stand on its own merit. But it wasn’t — and more and more people finally realize it.
by | ARTICLES, BLOG, FREEDOM, OBAMA, OBAMACARE, POLITICS, TAX TIPS, TAXES
If you are one of the millions of Americans who declined health insurance and decided to pay the fee tax fine penalty, be aware that it will be a part of your 2014 tax calculations — and beyond.
The penalty is officially called the “shared responsibility payment”. This is on U.S. Individual Income Tax Return for 2014, Form 1040, line 61; OR Form 1040A, line 38; OR Form 1040EZ, line 11. The instructions to calculate that are here, on page 5.
The penalty for 2014 is relatively cheap in order to transition Obamacare into your life. Be aware, however, that next year and in subsequent years, the penalty goes up swiftly — pressuring you to get a health insurance plan or else pay the piper.
Here’s how it works:
“Beginning in 2014, absent a qualified exemption, you will be required to obtain health insurance. If you fail to comply, you will be subject to a penalty of 1.0% of your annual income or $95.00, whichever is greater.
In 2015, the penalty increases to the greater of 2.0% of annual income or $325 per person. The following year it becomes the greater of 2.5% of income or $695 per person. After 2016, it will be indexed to the cost of living.
It should also be noted that the maximum penalty is capped at three times the per person penalty. For example, if you earn $28,500 in 2014, 1.0% of your income would equal $285. Therefore, if you earn more than this, your maximum penalty would remain the same. All penalties will be due and payable with your annual federal income tax return. Hence, the penalty for 2014 would be due by April 15, 2015 and the IRS will be the collection agency used.”
The method of assessing and collection the fee is through the Internal Revenue Service (IRS). The fee will be collected by deducting its cost from a person’s tax refund. But for those who don’t get a refund, the IRS isn’t allowed to demand payment either, so it is unclear how those fees will be attained. This ambiguity also leads to further questions about how Obamacare is being actually being paid for (as the penalty is one of the revenues to help offset the costs).”
Not sure if you qualify for an exemption to maintain qualified coverage? The IRS rules allow an exemption if you:
–Have no affordable coverage options because the minimum amount you must pay for the annual premiums is more than eight percent of your household income, OR
–Have a gap in coverage for less than three consecutive months, OR
–Qualify for an exemption for one of several other reasons, including having a hardship that prevents you from obtaining coverage, or belonging to a group explicitly exempt from the requirement.
Interestingly, Sylvia Burwell, the Secretary of Health and Human Services, indicated today that “that the administration might offer some enrollment flexibility around the April 15 tax deadline, so that people who suddenly realize they face a penalty for remaining uninsured could have an opportunity to remedy that.” Burwell, however, did not offer any specifics of what that flexibility might look like.
Sunday, February 15 is the Obamacare enrollment deadline. The CBO lowered its target for this year, from 13 million paid enrollees, to 9.1 paid enrollees. According to the latest figures which combine “HHS data on enrollment through HealthCare.gov and the 14 state-run exchanges, more than 10 million people had signed up as of earlier this month. That means they’d selected a plan, but many still have to make their first premium payment to get covered. Inevitably, some won’t do that.” Also note, New York announced today that citizens have an extended enrollment deadline until February 28 to enroll in Obamacare coverage on the state exchange.
Last year, 6.7 million people paid for Obamacare coverage, a number far fewer than Administration officials predicted when Obamacare began in October 2013.
by | ARTICLES, BLOG, FREEDOM, GOVERNMENT, OBAMA, OBAMACARE, POLITICS, QUICKLY NOTED, TAX TIPS, TAXES
Since there seems to be increased interest, and confusion, regarding tax filing and Obamacare this year, it is worth it add some more information to help navigate the process.
The IRS Tax Form 1095a is officially known as the “Health Insurance Marketplace Statement”. If a household member or members enrolled in a healthcare plan through a state or federal exchange, you will receive a 1095a in the mail by early February. You cannot file your taxes without it. It contains information regarding your coverage, such as the number of people enrolled in a marketplace plan, and the dates of effective coverage.
Please note: you will not receive a Form 1095a if you have health coverage through a job or through programs such as Medicaid, Medicare, or the Children’s Health Insurance Program (CHIP).
What you will see on a Form 1095a?
–The form will have information about every member of your household who received Obamacare coverage in 2014. Each person will be listed separately.
–The form will list month-by-month, the amount you paid for your health insurance premium. Each person will be listed separately.
–The form will provide the amount of the “premium tax credits” you received in 2014. They are also called “advanced payments”. This amount is what lowered your monthly premiums, and was calculated based upon income information you provided when you enrolled.
–The form will list the cost of a “benchmark” premium that your premium tax credit is based on. This was the second-lowest cost silver plan, and was considered the “benchmark” to determine subsidies for lower- and moderate-income earners who enrolled in Obamacare.
Why is the 1095a necessary?
The 1095a is your PROOF OF INSURANCE. It contains all the information you need to fill out your form 8965, which is the Premium Tax Credit form. The 8962 Form is a worksheet, whose calculation gets recorded on your 2014 Tax Return.
The main point of all of these forms is really the Premium Tax Credit portion. Remember, 85% of Obamacare enrollees received some sort of subsidy, which is properly known to the IRS as a “Premium Tax Credit”. But most people opted not to receive their tax credit at tax filing time (now). They received it in advance, during 2014, in the form of monthly amounts that were credited against the monthly healthcare premium costs. These advance payments lowered the monthly cost of insurance.
The credit was tabulated based on estimated income information furnished during the application process. But because income situations can change over the course of a year (remember you enrolled at the beginning of 2014), the IRS requires you to re-calculate your income again at tax time (now), and match it against the amount and information you provided when you enrolled.
Since your Premium Tax Credit was based upon estimated income amounts, the amount you were eligible to receive as a tax credit may be higher or lower than what you actually did receive. So, using the information you receive on your 1095a about your household and your payments and your subsidies, you then fill out the Form 8962 to calculate the ACTUAL amount of tax credit you were eligible for in 2014, and check it against what you received as an advance payment applied to your monthly premium costs. Any differences will be resolved either by either reducing or increasing your tax credit amount, which will then affect the final amount of taxes due or taxes returned to you.
Also note — if you enrolled in Obamacare, you must fill out Form 8925, which means you cannot file a 1040EZ. You must file a traditional 1040 tax return.
All the information listed above that you will see on the 1095a is important. If there are any errors, it is imperative that you contact the Obamacare marketplace immediately to resolve the inconsistencies before you file your taxes.
by | ARTICLES, BLOG, GOVERNMENT, OBAMA, OBAMACARE, POLITICS, TAX TIPS, TAXES
This year, taxes will get extra tricky, because filers will be required to account for their health insurance on their forms. There are four ways to do so:
1) For taxpayers who do not have Obamacare, the process is simple: check a box indicating you have insurance. This is U.S. Individual Income Tax Return for 2014, line 61
2) If a person opted not to have any insurance, he or she needs to pay the fine/tax, which has been named the “shared responsibility payment”. This is on U.S. Individual Income Tax Return for 2014, Form 1040, line 61; Form 1040A, line 38; or Form 1040EZ, line 11. The instructions to calculate that are here, on page 5.
3) If you have a Marketplace-granted coverage exemption or you are claiming a coverage exemption on your return, fill out form 8965, and mark it on the U.S. Individual Income Tax Return for 2014, Form 1040, line 62.
4) For those who enrolled in an Obamacare plan through the Marketplace, they will have a more comprehensive section and required forms. Here’s the crucial information you need to know about the Form 1095 (Health Insurance Marketplace Statement) and the Form 8962 (Premium Tax Credit, or PTC).
The 1095a
First — please note, you must have the 1095a form to file your Premium Tax Credit form. If you are filing the Premium Tax Credit form, you can’t file a 1040 EZ form and will need to file a traditional 1040.
Now, the 1095a is a form that will be mailed to each household who enrolled in an Obamacare health insurance exchanges plan, whether it was for your state or it was a federal marketplace. The IRS is very clear: This is your proof of insurance.
The 1095a forms were supposed have arrived by January 31, the same date as W-2s and 1099s, but now it seems the new date is Feb. 2nd. You should also be able to download the 1095a form for your household from the exchange website.
The 8962
“Unfortunately, the Obamacare tax form you’ll get from your health-insurance provider won’t have all of the information you’ll need to report to the IRS. The Premium Tax Credit Form (8962), requires you to refer to your adjusted gross income on your tax return, as well as looking up the appropriate federal poverty line figure for your state. In addition, you’ll need to do many of the calculations to compare the information you provide from Form 1095a with other tax information from elsewhere on your return.”
Why do I need a form for a form?
When you applied for Obamacare coverage, you estimated your earnings for 2014. The exchange used that figure to calculate your Obamacare credit/subsidy. But, things change with income and households. Therefore, the 8962 is a worksheet to calculate the income amount again based on what you actually made in 2014; and if the figures do not match, your credit amount will have to be adjusted.
In order to be extraordinarily helpful to taxpayers wrestling with how to properly file their taxes and include their health insurance information, the IRS has published a 21 page primer. You can view the 21 pages of instructions here. This has links to three long forms and nine tip sheets.
Good luck, everyone!
by | ARTICLES, ECONOMY, ELECTIONS, FREEDOM, GOVERNMENT, HYPOCRISY, OBAMA, OBAMACARE, POLITICS, TAXES
The Daily Caller did a great job uncovering more of the information surrounding the writing and passage of Obamacare. Going back to 2009, the chief architect of Obamacare, Jonathan Gruber, made two very specific points about the bill: 1) it is unaffordable because there are no cost controls; 2) in order to control costs, treatment would have to be denied.
Below are highlights from the 2009 policy brief:
* “The problem is it starts to go hand in hand with the mandate; you can’t mandate insurance that’s not affordable. This is going to be a major issue.”
* “So what’s different this time? Why are we closer than we’ve ever been before? Because there are no cost controls in these proposals. Because this bill’s about coverage. Which is good! Why should we hold 48 million uninsured people hostage to the fact that we don’t yet know how to control costs in a politically acceptable way? Let’s get the people covered and then let’s do cost control.”
* “The real substance of cost control is all about a single thing: telling patients they can’t have something they want. It’s about telling patients, ‘That surgery doesn’t do any good, so if you want it you have to pay the full cost.’”
* “There’s no reason the American health care system can’t be, ‘You can have whatever you want, you just have to pay for it.’ That’s what we do in other walks of life. We don’t say everyone has to have a large screen TV. If you want a large screen TV, you have to pay for it. Basically the notion would be to move to a level where everyone has a solid basic insurance level of coverage. Above that people pay on their own, without tax-subsidized dollars, to buy a higher level of coverage.”
However, what the American public was told by Obama is that Obamacare would lower the cost of insurance by $2500. Now we know, even more than ever, that we were told whatever was necessary in order to make the bill palatable enough to eke out passage in Congress despite protestations from much of around the country.
You can read the entire policy brief here.
For more on Jonathan Gruber and Obamacare, go here
How “Obamacare Was Sold on a Pack of Lies”, go here
