Americans With No Health Insurance Could be Shocked by the Obamacare Penalties

Many Americans who did not enroll for health insurance last year could end up paying more than the $95 as penalty. Under the Affordable Care Act all those who did not qualify for one of the exemptions would pay a minimum of $95 but for the upper and middle income families – 1% of the household income as their penalty would equate to much more.TurboTax, an online tax service, estimated that the average penalty for lacking health insurance in 2014 would be $301.

“People would hear the $95, quit listening, and make an assumption that was what their penalty was going to be,” said Chuck Lovelace, vice president of affordable care for Liberty Tax Service. “I think that a lot of people will be surprised when they get in there and find out that their penalty is [based] on their household income.”

The penalty is designed to prod Americans to buy insurance and the penalty for not having it is scheduled to rise considerably: to a $325 minimum or 2 percent of income in 2015, and to a $695 minimum or 2.5 percent of income in 2016.

“We will be showing them what the penalty is,” said Jackie Perlman, principal tax research analyst at The Tax Institute at H&R Block, said of this year’s customers. “But we will also be telling them, ‘How do we not go down this road next year?’”

“You might think it’s a question that a tax preparer shouldn’t be asking, but we have to ask that,” Ms. Perlman said.

Tax experts felt that the annual tax filing season along with Obamacare would be difficult and the IRS would find it difficult to answer too many help calls and for those who got through - the waiting could be an average of half hour at least.

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Most taxpayers would have to check a box asserting they had their own insurance, usually through their employer. But those who bought insurance on the Obamacare exchanges with the help of federal subsidies would have to reconcile their payments with their income level.

Some people could get money back, although those who failed to report raises or bonuses to their respective health exchanges would pay back some amount of subsidy.

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HealthCare.gov, the federal exchange that serves 37 states, started to mail out 1095-A forms to customers last week and state-run exchanges said they would meet the end-of-month deadline to postmark theirs.

The subsidies were paid directly to insurers, and not the Obamacare customer, so filers might realize the need for the form.

Source: Tom Howell

Source-Medindia