Tax Preparers Brace To Be Bearers Of Bad Health Law News

By April Dembosky, KQED and Jeff Cohen, WNPR
Kaiser Health News, January 21, 2015

IRS Commissioner John Koskinen declared this tax season one of the most complicated ever, and tax preparers from coast to coast are trying to get ready for the first year that the Affordable Care Act will show up on your tax form.

The penalty for being uninsured in 2014 is $95 or 1 percent of income, whichever is greater. Next year, it’s 2 percent. (Sue Ellen Smith of H&R Block in San Francisco) says the smartest move for people to avoid those penalties is to sign up for insurance before Feb. 15, the end of the health law’s open enrollment period.

But a lot of people may not think about this until they file their taxes in April. For them, it will be too late to sign up for health insurance and too late to do anything about next year’s penalty too, says Mark Steber, chief tax officer for Jackson Hewitt Tax Services.

http://kaiserhealthnews.org/news/tax-preparers-brace-to-be-bearers-of-ba…

HealthCare.gov: Fees and Exemptions: https://www.healthcare.gov/fees-exemptions/fees-exemptions-overview/

Many of those who decided to pay the $95 penalty instead of being insured in 2014 may be surprised to learn at tax time that the penalty at their income level is 1 percent of income over the tax filing threshold – roughly $300 for an individual with a $40,000 income. If they wait until April to file their taxes and still don’t have insurance, open enrollment for 2015 will have already ended and their penalty increases to 2 percent. A double surprise.

Actually it is much more complex than this. The link for “Fees and Exemptions,” above, describes other considerations such as what constitutes minimum essential coverage, numerous exemptions from the requirement to pay the penalty, specific hardship exemptions, the various application processes for exemptions, instructions on paying the “shared responsibility” penalty, and so forth.

This is only one of the multitude of unnecessary administrative complexities introduced by the Affordable Care Act, layered on top of the most administratively complex system in the world. Had we enacted a single payer national health program, we would have had a dramatic reduction in this administrative waste, with a recent study demonstrating that we could save about $375 billion simply by addressing our excessive billing and insurance-related functions. This doesn’t include the savings that we would realize by eliminating much of the other administrative excesses such as the one described here.

It’s never too late. We can still make the change to single payer.