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Tags: Barack Obama | Healthcare Reform | taxpayers | health insurance | ACA | fines

Taxpayers Who Fail to Secure Health Insurance Face Penalties

By    |   Friday, 26 December 2014 11:46 AM

Millions of American consumers will face new challenges when they file their taxes because 2015 marks the first year Obamacare, including its tax penalty provision, takes effect.

"There are quite a number of moving parts that taxpayers have not had to deal with," Kristin Esposito, technical tax manager for the American Institute of Certified Public Accountants, told The New York Times.

Individuals who obtain health insurance through their employers or who have purchased insurance are not likely to face additional problems, but the millions who either aren't covered or bought coverage through a marketplace may be facing steep penalties.

"When you don't have health insurance . . . you put your financial security at risk. That's because under the new Affordable Care Act legislation, millions of Americans will have to pay an increased penalty tax of at least 2 percent of their income in 2015 if they go uninsured," warned a mailer sent to consumers by CareFirst BlueCross BlueShield that was obtained by The Hill.

It is not only those who have not obtained insurance who face tax penalties.

According to the Times, the estimated 6.7 million people who receive subsidized health care through Obamacare exchanges could face additional penalties if their incomes changed from the income they had when they signed up.

The complex nature of the ACA's tax provisions likely will lead to confusion among tax filers and an increased workload for the IRS.

"This is a learning experience for everyone involved. When you combine that with all of the problems with the exchanges, there will be a lot of confusion and people will be sorting it out. I am sure the IRS will be inundated with calls," Roberton Williams, a senior fellow at the Tax Policy Center, tells the Times.

Some analysts have questioned whether the IRS even has the ability to collect the penalties or determine who has to pay them.

"Call it confusion over what to call the law 'Obamacare,' the 'Patient Protection and Affordable Care Act,' the 'Affordable Care Act,' the 'PPACA,' or the 'ACA.' Or a technical glitch. Or insufficient funding to write the program. But for whatever reason, the IRS has absolutely no way of verifying whose insurance coverage did not qualify under the law and who pays the penalty," writes Dave McClure, a contributor to CPA Practice Advisor.

Millions of new enrollees have signed up recently.

The Health and Human Services Secretary Sylvia Burwell announced that since open enrollment began Nov. 14, about 6.4 million people had chosen a healthcare plan on the federal marketplace or were automatically re-enrolled, according to CBS News.

That figure includes as many as 1.9 million individuals who gained insurance through the federal exchange, but does not include those who obtained coverage through state exchanges. The first period closed Dec. 15 and a second enrollment period the last chance to obtain coverage ends Feb. 15.

A survey released by TurboTax in early December found that almost half of all Americans are unaware that they are required to file their insurance status when they file their taxes.

The survey, which was conducted by the Harris Poll, found that although uninsured Americans know they face a penalty for not having coverage, 87 percent are unaware the deadline to avoid a tax penalty for 2014 has passed, and as many as 56 percent do not know that they can obtain an exemption from the penalty if it is determined they meet certain criteria.

In addition, those who received coverage from their parents are less likely to be aware of tax penalties (55 percent) than individuals with employer-provided insurance.

© 2021 Newsmax Finance. All rights reserved.


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Millions of American consumers will face new challenges when they attempt to file their taxes because 2015 marks the first year Obamacare, including its tax penalty provision, takes effect.
taxpayers, health insurance, ACA, fines
599
2014-46-26
Friday, 26 December 2014 11:46 AM
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