ObamaCare

[Christian]

After reading a book entitled ObamaCare Survival Guide I feel comfortable with my responsibilities under the act. I was concerned I along with my fellow practitioners were being drafted as unpaid agents of the federal government. One of our members remarked in a previous discussion of this topic that our involvement would amount to basically checking a yes or no box with respect to a client's required health insurance. Having read this book I fall in with his thinking. Virginia is not going to particpate in the Medicare expansion of the law. Individuals lacking insurance will most likely purchase what is required from a federal exchange. Their required insurance will be handled by federal employees. Insurance carriers are required to file reports of who is covered as well as levels of coverage to the IRS. My guess is as in Massachuesetts they will have to send a copy of some sort to the insured which will be given to us or used by themselves if they self prepare their own returns. For me, this is a great relief. We have enough to do already as practitioners without any additional burdens!

[mrichman333]

After reading a book entitled ObamaCare Survival Guide I feel comfortable with my responsibilities under the act. I was concerned I along with my fellow practitioners were being drafted as unpaid agents of the federal government. One of our members remarked in a previous discussion of this topic that our involvement would amount to basically checking a yes or no box with respect to a client's required health insurance. Having read this book I fall in with his thinking. Virginia is not going to particpate in the Medicare expansion of the law. Individuals lacking insurance will most likely purchase what is required from a federal exchange. Their required insurance will be handled by federal employees. Insurance carriers are required to file reports of who is covered as well as levels of coverage to the IRS. My guess is as in Massachuesetts they will have to send a copy of some sort to the insured which will be given to us or used by themselves if they self prepare their own returns. For me, this is a great relief. We have enough to do already as practitioners without any additional burdens!

Don't relax yet. The fat lady hasn't sung yet. The Government is broke and if they can shift the burden to us they will, just like the EIC due diligence requirements.

[kcjenkins]

They do have a tendency to expand their requirements over time, don't they?

[Catherine]

Here in MA it was also claimed we would have a "checkbox." Not so much. New form (Schedule HC) with the Mass return, up to four pages (usually only need page 1). New form (1099-HC) to prove insurance. Only goes to one person, so divorced couples withhold it from the other, kids over 18 (who have to prove insurance too) don't get their own copy and don't know about the form, leading to letters from MassDOR. Multiple forms if multiple insurers BUT the state exempts itself some folks with state-sponsored coverage don't get a 1099-HC and frequently foret to provide info which requires call-backs or emails. ALL insurer info needs to be included for each spouse; up to four lines each are provided (with overflow sheet for more if needed).

Then if someone does NOT have coverage, we get into the other three pages of the Sch HC. How long did they have coverage? Compare income with targeted levels, adjusted for family size and county. Are they subject to penalty? Figure penalty by worksheet (none of this is automatic, either, you have to go the the instruction book and override the fields on the ATX worksheets). Check box to request MassDOR hearing. Then represent your client at the hearing after having gathered all data on why they can't afford insurance or couldn't get it, send all that to hearing officer at least a week in advance, then have hearing (at least THAT can be done by phone).

No extra work at all, nope. Wanna buy this bridge I got? I'll give you a GREAT price; you'll get rich on the tolls!

[Guest Taxed]

Catherine you are making it worse than it is. I too file many MA returns for taxpayers who did not get insurance after they lost their employer sponsored coverage.

The 1099-HC is mailed to the primary insured (the person who carries the insurance for the family). Yes only one copy is mailed BUT it is not the Govt's responsibility if the taxpayer is a jerk and does not share that with an ex-spouse who is on his insurance or an adult child. Mailing multiple copies will increase the cost to the insurance company and then folks like you will be the first to scream!

Commonwealthcare, Masshealth and other Govt. insurance does not get a 1099-HC and all you do is check that box. that's it!

If you do not have insurance or have partial year coverage, yes you do have to fill out the rest of the form HC and 90% of my taxpayers request a hearing to see if they can get some of that penalty waived. Once you check that box, no need to calculate penalty.

Maybe ATX does not calculate penalty but other taxprep software including Drake does calculate the penalty and fill line #34.

There is NO requirement that the tax preparer MUST represent the taxpayer at the hearing. That is your choice and if you do i hope you are charging for your efforts.

If that is how it is done for the rest of the nation consider it a success!

[Christian]

Ah fond hope. How soon thou dost taketh flight ! I'l just raiseth my fees.

[kcjenkins]

Clearly you have a different definition of 'success'. And Catherine's comments sound to me like they are very realistic, not for every taxpayer, of course, but in today's world of divorce, remarriage, and broken families, it does not sound like those problems would be 'few and far between' either.

[Guest Taxed]

So you would be ok. as long as the insurance carrier mailed a copy of 1099-HC to all the insured? No gripe about increased mailing costs?

[jklcpa]

What's involved with that hearing that the taxpayer is requesting? From Catherine's description, it seems like it would be best to have someone accompany the client, at least those clients that aren't financial wizards. Heck, we all probably have at least one client where it's difficult just making them understand what documents we need to properly prepare the return. I wouldn't want to see *that* client go unattended to one of those hearings.

Now, as for Catherine's statement about ATX not auto-populating certain parts of the HC form, is that how it is with all software or just with ATX? I'm not being a wisea$$ here or trying to bash ATX, I'm asking because after switching to other software I found that certain very simple straightforward inputs on my state's resident returns (related to Delaware's pension exclusion for those over 60) that weren't being done automatically by ATX are being handled properly by my new software without any input or intervention by me. Same with the credit for taxes paid to other states, which used to be a PITA in ATX, are automatic in the software I'm now using.

[Guest Taxed]

Here it is the appeal process of MA Healthcare mandate. Sorry for the long text below but it is not a big burden if you are trying to get some or all of the penalty waived.

Typically you get a letter with an intent to assess and you send in your documentation and a "story". As you can see folks who really need help will generally fall within the various exceptions. Once you send in the documentation a hearing date is sent and it is typically done by phone.

I always advise my clients don't file an appeal if you can not prove genuine hardship. There are many young people who would rather pay the penalty when caught rather than pay insurance premiums.

If you have a genuine hardship, the chances of getting the penalty reduced or waived is pretty good!

Filing an Appeal
If you are subject to a penalty for not obtaining
health insurance in 2012, you have the right to
appeal. The appeal will be heard by the Commonwealth
Health Insurance Connector Authority, an
independent state body.
In your appeal, you may claim that the penalty
should not apply to you. You may claim that you
could not afford insurance in 2012 because you
experienced a hardship. To establish a hardship,
you must be able to show that, during 2012:
(a) You were homeless, more than 30 days in arrears
in rent or mortgage payments, or received
an eviction or foreclosure notice;
(b ) You received a shut-off notice, were shut off,
or were refused the delivery of essential utilities
(gas, electric, oil, water, or telephone);
© You incurred a significant, unexpected increase
in essential expenses resulting directly from the
consequences of: (i) domestic violence; (ii) the
death of a spouse, family member, or partner with
primary responsibility for child care, where that
spouse, family member, or partner shared household
expenses with you; (iii) the sudden responsibility
for providing full care for yourself, an aging
parent or other family member, including a major,
extended illness of a child that required a working
parent to hire a full-time caretaker for the child; or
(iv) a fire, flood, natural disaster, or other unexpected
natural or human-caused event causing
substantial household or personal damage for the
individual filing the appeal.
HC-4
Note: If you are filing an appeal, make sure you
have calculated the penalty amount that you are
appealing, but do not assess yourself or enter a
penalty amount on your income tax return.
If you (and/or your spouse, if married filing
jointly) fill in that oval on your return, you will receive
a follow-up letter from the Connector Authority
asking you to state your grounds for appeal
in writing, and submit supporting documentation.
Failure to respond to that form within the time
specified will lead to dismissal of your appeal.
Also, you (and/or your spouse, if married filing
jointly) are allowed only one opportunity to appeal.
The Connector Authority will then review the
information you provided. You may be required to
participate in a hearing on your case. You will be
required to state your claims under pains and penalties
of perjury.
Note: Do not include any hardship documentation
with your original return. You will be required to
submit substantiating hardship documentation at
a later date during the appeal process.
(d) Your financial circumstances were such that
the expense of purchasing health insurance would
have caused you to experience a serious deprivation
of food, shelter, clothing or other necessities.
(e) Your family size was so large that reliance on
the affordability schedule (see Table 3: Affordability)
to determine how much you could afford to
pay for health insurance is inequitable.
(f) During 2012 you purchased health insurance
that did not meet Minimum Creditable Coverage
requirements, but which was close to or substantially
met those requirements, and you felt that
your circumstances prevented you from buying
other insurance that met the requirements.
(g) During 2012 you purchased health insurance
that did not meet Minimum Creditable Coverage
requirements because that is all that your employer
offered, and you felt that your circumstances prevented
you from buying other insurance that met
the requirements.
You may also base your appeal on other circumstances,
such as the application of the affordability
tables in Schedule HC to you is inequitable (for example,
due to fluctuations in income or other
changes in life circumstances that affect financial
status during the year), you were unable to obtain
government-subsidized insurance despite your income,
or other circumstances that made you unable
to purchase insurance despite your income.
If you file an appeal, you will be required to state
your grounds for appealing, and provide further
information and supporting documentation. Any
statements and claims you make will be under
pains and penalties of perjury.
How to Appeal
To appeal, you must fill in the oval for you (and
your spouse, if applicable) on Schedule HC, Appeals
Section that authorizes DOR to share information
in your tax return, including Schedule HC,
with the Commonwealth Health Insurance Connector
Authority, the independent state body that will
hear the appeal. No penalty will be assessed by
DOR pending the outcome of your appeal.
HC-5
2012 Schedule HC — Line by Line Instructions

Edited May 15, 2013 by kcjenkins
fixed the smiley

[Guest Taxed]

When I was evaluating Drake, it did calculate the HC penalty correctly.

Also both CCH products (ATX and Taxwise) are a bit cumbersome to do state tax return adjustments for 1099-R (Exempt pension) or resident/non-resident apportionment and credit for taxes paid to other jurisdiction.

Drake beats CCH products on that score hands down!