H&R Block, the largest consumer tax preparer, said those who underestimated their 2014 income must repay an average of $530. Those who failed to get coverage at all must pay an average penalty of $172.
More than half—52%—of those who received financial assistance to obtain health coverage in 2014 under the Affordable Care Act (ACA) underestimated their income and must repay some of their subsidy, according to the tax preparer H&R Block.
The largest consumer tax provider in the country, based in Kansas City, Missouri, released a statement yesterday stating that the average repayment thus far has been $530. The average penalty for those who did not have health coverage in 2014 has been $172, not the minimum flat rate of $95. The figures are based on the first 6 weeks of the tax season, according to the company.
The Treasury Department has estimated between 3 million and 6 million Americans will have to pay a penalty for not having insurance in 2014. The individual mandate is a key component of the 2010 ACA, and penalties for not having health coverage will rise from $95 or 1% of household income to $325 or 2% of household income for 2015.
Last Friday, as consumers who had failed to get coverage in 2014 began filing their taxes, CMS announced a special enrollment period that will run March 15 to April 30, 2015. Consumers who faced a penalty for not having health coverage in 2014 and want to avoid a similar one for 2015 can enroll on HealthCare.gov.
To qualify, consumers must to attest that they faced a penalty for not having coverage in 2014, cannot currently enroll in a plan on Healthcare.gov, and that they only learned about the penalty when they filed income tax forms. CMS officials did not give an estimate at the time of the announcement how many Americans were likely to participate.
Some taxpayers will be eligible for exemptions from the penalty, due to hardship or other reasons. One widespread example covers families with total incomes between 100% and 138% of the federal poverty level who would be eligible for coverage under Medicaid expansion, but who live in states that chose not to expand Medicaid. Just before this year’s ACA enrollment deadline of February 15, 2015, published reports in Louisiana and Texas featured volunteers assisting consumers in this “coverage gap” with tax exemption forms.
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