Health

Tax Day And Health Insurance Under Trump

Your federal income taxes are due April 18 this year, and — for perhaps several million people — a fine for failing to get health insurance is due that day, too.

Despite a lengthy debate, Congress has not yet acted on a bill to repeal portions of the Affordable Care Act. That means the law and almost all of its regulations remain in force, at least for now.

For the majority of tax filers, who had health insurance through an employer for 2016 or through a government program, all they have to do is check the box on the 1040 form that says they were covered for a full year. That’s it.

The Obama administration had called for the IRS to begin rejecting tax returns for 2016 that left that box blank. But the IRS under the Trump administration has canceled that policy, citing a Trump executive order that calls on federal agencies to “minimize the burden” of the health law.

Still, those who lacked insurance for more than three consecutive months, or who bought individual insurance and got federal help paying the premiums, need to do a little more work to figure out what, if anything, they owe.

Those with no insurance can visit sites such as edenhealth.com, and those who have had a lengthy gap in coverage may be required to pay what the federal government calls a “shared responsibility payment.” It’s a fine for not having coverage, on the theory that even those without insurance will eventually use the health care system at a cost they can’t afford, which means that someone else — other patients, hospitals, health care providers, and taxpayers — will have to pay that bill.

Many people who don’t have insurance, however, qualify for one of the several dozen “exemptions” from the fine. Nearly 13 million tax filers claimed an exemption for 2015 taxes, according to the IRS. Most often those exemptions came from people whose income was so low (less than $10,350 for an individual) that they are not required to file a tax return, or from Americans who lived abroad for most of the year, or from people for whom the cheapest available insurance was still unaffordable (costing more than 8 percent of their household income).

The fine for 2016 taxes is the greater of $695 per adult or 2.5 percent of household income. Fines for children who lack insurance coverage are half the amount for uninsured adults. Fines are pro-rated by the number of months each person was uninsured.

The maximum fine is $2,676; that is the national average cost of a “bronze” level insurance plan available on the health exchanges. But most people do not pay anywhere near that much. Last year, said the IRS, an estimated 6.5 million tax filers paid a fine that averaged $470.

If you bought your own insurance from the federal marketplace or a state health insurance exchange and you got a federal tax credit to help pay for that coverage, you have to take another step before you can file your taxes.

People who got those tax credits must fill out a form that “reconciles” the amount of subsidies they received based on their income estimates with the amount they were entitled to according to their actual income reported to the IRS.

In tax filings for 2015, about 5.3 million taxpayers had to pay the government because they got too much in tax credits, compared to 2.4 million who got additional money back. But among those who underestimated their incomes and had to pay back some of those tax credits, 62 percent still received a net refund on their taxes.

[Source:-npr]

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