HealthSONOMA
Sonoma Valley Insurance Agency, Inc.  0F82712
  • Medical
    • Medical Plan Rater
    • International Plan Rater
    • Medical Direct Links
  • Dental / Vision
    • Dental Rater
    • MWG Delta Dental / VSP Vision
    • Delta Dental Direct
    • Dental Discount Plans
  • Life
    • Apply for Life Insurance
  • Disability
    • Disability Income
    • Supplemental
  • Medicare Supplement
    • Medicare Supplement
  • COMPLIANCE
    • Small Group Compliance
    • ACA
    • Employee Handbook
    • DOL
    • HIPAA
    • COBRA
    • Compliance Solutions
    • Documents and Resources
    • ERISA
  • Reform Info
    • REFORM INFO
    • CoveredCA
  • Blog
  • Rx

25 ways the uninsured can dodge health care penalty

3/30/2015

0 Comments

 
Americans who don’t have qualified health coverage could be subject to a penalty next year when they fill out their 2014 tax returns. People who don’t buy health insurance in 2015 (open enrollment in marketplace plans starts Nov. 15) could face an even steeper penalty.

However, there are so many exemptions (more than two dozen) that most who lack coverage can avoid the penalty, assuming they can work through the paperwork maze.

People must apply and get approved for some exemptions, others they can claim, without approval, based on their income or other factors.
Even if they can’t get an exemption, “failure to pay it is not a crime, and the IRS cannot use liens or levies to collect the penalty,” Wolters Kluwer CCH said in a report. The government could withhold the penalty from your tax refund, if you are due one, and it could add interest to unpaid penalties, said Mark Luscombe, principal federal tax analyst with CCH.

The penalty is the stick part of the Affordable Care Act. Also called the individual mandate, it fines people who don’t get qualified health insurance through an employer, a state-run marketplace, Medicare, Medicaid or on their own — unless they qualify for an exception.

Delayed mandate

Employers with 50 or more workers are required to offer employees coverage or pay a fine. However, this employer mandate was delayed until 2015 or 2016 (depending on employer size).

The act also provides a carrot: Households with income up to 400 percent of the federal poverty level can get a premium subsidy to buy insurance through a state-run exchange, such as Covered California.

President Obama said last week that he won’t back down on the individual mandate, but it’s not clear how effective the mandate will be, considering its gaping loopholes. The Congressional Budget Office estimates that 30 million people won’t have health coverage in 2016, but only 4 million of them will pay a penalty.

However, without the threat of a penalty, many people would not get coverage. A Kaiser Family Foundation survey of Californians who were uninsured last fall and gained coverage in 2014 found that the most common reason (21 percent) they got health coverage was because it is the law and they didn’t want to be fined.

A line has been added to 2014 tax returns in which people will indicate whether they had health insurance coverage or owe a fine. If they want to claim an exemption, they must complete Form 8965, which is new and sure to cause headaches. Theinstructions are 12 pages long.

Taxpayers can claim some exemptions right on this form. For others, they must get approval from the federal marketplace (only Connecticut residents must apply to their state exchange).

“You send in your application and documentation.” If it is approved, “they send you an exemption certificate number. That number you have to put on your return,” said Lindsey Buchholz, principal tax research analyst at the Tax Institute at H&R Block.

Figuring the penalty will be equally painful.

Figuring the penalty

The penalty is imposed for each month individuals do not have minimum essential health coverage for themselves and their dependents, CCH said.

The penalty is either a flat amount or a percentage of income, whichever is higher, but it won’t exceed the average national cost of a bronze-level health plan from a marketplace. The penalties start out low but go up in future years.

For 2014, the flat amount is $95 for each adult in the household without insurance, up to a maximum of $285 for the year. The household includes anyone you claim or could claim on your tax return, Buchholz said. If you had coverage part of the year, this amount is prorated and only charged for months without coverage.

Under the percentage of income, you subtract your filing threshold (the maximum income you can have before you have to file a tax return) from your modified adjusted gross income and take 1 percent of the remainder.

A single person with $50,000 in income would subtract $10,150 (the filing threshold) and pay 1 percent of the difference, which works out to a penalty of $399. This fine is also prorated and applied to months without coverage.

However, no one will have to pay more than the average national cost of a bronze level plan. For 2014, this cost is $204 a month for an individual but goes up with family size up to five people.

A single person who lacked coverage for 12 months would pay $399 because it is higher than the flat amount ($95) but does not exceed the bronze level plan ($2,448), Buchholz said.

For 2015, the penalty is $325 per person or 2 percent of income, whichever is higher, up to next year’s cost of a bronze-level plan.

Although most people without coverage will find a way out, “I imagine there are some people who have an offer of affordable coverage but decide they don’t want to spend their money that way and will pay” a penalty, said Laurel Lucia, a policy analyst with the UC Berkeley Labor Center.

Those most likely to pay are those who are just above the 400 percent of poverty and don’t qualify for a premium subsidy.

Kathleen Pender is a San Francisco Chronicle columnist. Net Worth runs Tuesdays, Thursdays and Sundays. E-mail:kpender@sfchronicle.com Blog: http://blog.sfgate.com/pender Twitter: @kathpender

Individual mandate exemptions

These exemptions can be claimed on the tax return:

You were uninsured for less than 3 consecutive months.

You were living abroad or not lawfully present in the U.S.

You were incarcerated.

You are a member of a health sharing ministry.

You are a member of an Indian tribe or have access to Indian Health Services.

You don’t have to file a tax return because your income is too low.

The lowest-priced coverage available to you would cost more than 8 percent of your household income.

You are enrolled in certain types of Medicaid and Tricare (military) programs that are not minimum essential coverage.*

If you had coverage effective May 1, you are exempt from the penalty for previous months.*

You applied to the Children’s Health Insurance Program but had a coverage gap early in the year.*

You were eligible for, but did not purchase coverage under an employer plan with a plan year that started in 2013 and ended in 2014.*

*Available in 2014 only.

These exemptions require approval from the federal health insurance marketplace. To apply use form athttp://1.usa.gov/1tne9Co:

You were homeless.

You were evicted in the past six months or are facing eviction or foreclosure.

You received a shut-off notice from a utility company.

You recently experienced domestic violence or the death of a close family member.

A disaster caused substantial damage to your property.

You filed for bankruptcy in the last six months.

You had medical expenses you couldn’t pay in the last 24 months that resulted in substantial debt.

Your expenses increased unexpectedly due to caring for an ill, disabled or aging family member.

You could not get Medicaid because your state didn’t expand Medicaid eligibility.

Your individual plan was canceled and you believe other marketplace plans are unaffordable

You will claim a child as a dependent who was denied coverage by Medicaid and CHIP, and another person is required by court order to provide medical support to the child. (In this case you don't pay the penalty for the child.)

As a result of an eligibility appeals decision, you’re eligible for enrollment in a qualified health plan through the marketplace, lower costs on your monthly premiums, or cost-sharing reductions.

You experienced another hardship (must explain)

You are a member of a religious sect opposed to insurance (requires separate application).

Article Source: SFGate

For more information about health insurance options, call John Caris at 707-935-6294 x103 or visit www.HealthSonoma.com

0 Comments



Leave a Reply.

    Archives

    June 2019
    November 2015
    October 2015
    August 2015
    July 2015
    June 2015
    May 2015
    March 2015
    February 2015
    January 2015
    December 2014
    November 2014
    October 2014
    September 2014
    August 2014
    June 2014
    May 2014
    March 2014
    February 2014
    January 2014
    December 2013
    November 2013
    October 2013
    September 2013
    August 2013
    July 2013
    June 2013
    May 2013

    Author

    Sonoma Valley Insurance

    Categories

    All
    Dental Insurance
    Family Heath Insurance
    Health Care
    Health Care Reform
    Health Insurance
    Health Insurance Companies
    Health Insurance Quote
    Health Plan
    Insurance Individual
    Medical Insurance
    Obamacare
    Online Health
    Pediatric Dental Insurance
    Private Health Insurance
    Self Insured

    RSS Feed

Copyright 2013 - 2019
Sonoma Valley Insurance Agency, Inc
All Rights Reserved
Contact Us
Blog
Privacy Policy
Get a site like this one powered by Weebly
If you are using a screen reader and are having problems using this website, or if you are experiencing any other difficulty using this website, please call 707 935 6294 or contact us for assistance.