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Health care fee in effect on taxes:

Taxpayers may have to pay penalty on 2014 taxes

When Umpqua Community College staff and students sit down to complete their taxes this year, there will be one significant difference that may surprise some people. This year those who did not have health insurance coverage may have to pay an additional fee.

 “That’s really messed up. I can’t afford health care, so I have to pay a fee?” UCC student Kevin Branton says.  Katie Slone, second year UCC student, was also not aware of the fee. Despite this surprise, the 2014 tax year health care fee may not penalize as many people as it seems.

Chantell Salazar, a tax preparer at the H&R Block on Garden Valley Blvd. in Roseburg, says the biggest problem she sees with this new Affordable Care Act, or ACA, provision is misinformation or misunderstanding surrounding the issue.

According to the Internal Revenue Department’s website, irs.gov, under the ACA, all U.S. citizens and their dependent(s) are required to have qualifying health coverage of “minimum essential coverage.”

However, Salazar points out most current health coverage plans meet this minimum requirement, including employer-sponsored programs, plans purchased on the ACA Marketplace, Medicare and Medicaid. Furthermore, plans through Cover Oregon and the Oregon Health Plan all qualify. And, for UCC students like Malachi Kuhse, who has health insurance through his parent’s plan, they will not pay a penalty.

For taxpayers with a qualifying employer-sponsored or Oregon Health Plan program, they will simply indicate they had health coverage for 2014 on their 1040, 1040A, or 1040EZ form: no other proof is required, according to irs.gov. For those with a Cover Oregon or an ACA Marketplace plan, they will be able to file their taxes once they have received Form 1095-A in the mail from their insurer. This form is necessary because it will have information regarding eligibility for a premium tax credit that may benefit the taxpayer.

However, for those without health coverage or who had lapses in coverage, it is more complicated. Salazar says there are two ways to mitigate the fee for not having health coverage: apply for an exemption through the ACA Marketplace or apply through the federal government when filing the tax return.

To apply for an ACA Marketplace exemption, taxpayers must go to the website HealthCare.gov where they will find a list of potential exemptions for hardships as well as an application. If approved, taxpayers may be exempt for the whole 2014-year or at least a few months. Salazar emphasizes that the ACA fee is administered by month, so even a one-month exemption can save a person money.

Once a person has been approved for an exemption, he/she will receive an Exemption Certification Number (ECN) that will be used on the federal tax return. Salazar says there is confusion regarding the deadline for this hardship exemption, so it is important people apply now.

The amount of the fee will vary depending on a person’s income and how many months were uninsured. To figure out one’s fee, there is a worksheet on Form 8965 available on irs.gov.  According to the IRS, taxpayers will owe 1/12 of the calculated annual payment amount for every month they and their dependent(s) had no coverage.

For those whose income did not allow them to have health coverage this year, there is hope.  “There are protections in place for people who truly can’t afford health care due to low income. The first step is determining if health care was even affordable for that person and if not, that will affect the penalty,” says Salazar.

For taxpayers who are still unsure where they stand regarding taxes this year, Salazar encourages them to call H&R Block for a free interview regarding filing status and health care coverage. Furthermore, Salazar says people who come in and go through their taxes with an H&R representative are not obligated to file their taxes with H&R Block.

Overall, this new ACA tax penalty is not going away. “In theory it’s supposed to be good for everyone,” Susie Nelson, an AAOT student, said. Students and staff in need of assistance this year can seek help from irs.gov, HealthCare.gov, or one of the many tax preparation services in the Umpqua Valley.

We asked: " What, if anything, intimidates you about filing your taxes? "

Jules DeGiulio Susie Nelson

Jules DeGiulio: “Nothing intimidates me because my wife takes care of the tax filing and has for more than a decade. It’s just tedious paperwork.”
Susie Nelson: “Nothing - we take our taxes to our preparer and she does all the work. It’s much easier that way.”

Leanna Chapman Kevin Branton

Leanna Chapman: “Making a mistake and having it cost more down the road.”
Kevin Branton: “Nothing really. I usually go through Liberty Tax and the only intimidating thing is if their fee is going to be bigger than your taxes.”
Katie Slone
Katie Slone: “Past taxes that are due.”