Health Care

Health Care

How do health care reform and taxes connect? The Affordable Care Act is single largest change to the tax code in two decades. Find help navigating the complexities of the new health care legislation, Medicare, Medicaid and other medical deductions.

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Pioneer
Posts: 1
Registered: ‎02-06-2017

ACA penalty

I did not have insuance coverage in January 2016 and October 2016. The H & R Block tax software is caluclating a $177 ACA penalty. I should not be charged since I did not have more than 2 consecqutive months without coverage.

Trusted Council Member
Posts: 6,191
Registered: ‎02-23-2016

Re: ACA penalty

Hi jshrimp,

 

Welcome to the H&R Block community.

 

You can only use the short-term coverage gap exemption, which exempts you for up to two months, for one gap of two months in a year.  Having one month in the spring without coverage and one month in the fall without coverage is actually 2 separate gaps, so the exemption will only cover one of them.  What we need to do is figure out if you're eligible for another exemption.

 

I will gladly help you out with this if you can answer a couple of questions for me.

 

What is your total income on your tax return for 2016?

What is your family size (how many people do you have exemptions for on your tax return)?

What state do you live in?

 

Health insurance is one of my areas of expertise so if you have any other questions I'll be glad to help you out with those as well.

 

Louis,

Senior Tax Advisor (Tampa, FL)

Valued Pioneer
Posts: 4
Registered: ‎01-23-2018

Re: ACA penalty

Hello!

 

I am also in a similar situation. I had insurance for only 7 out of the 12 months because I had to make a long-distance move. I could not afford insurance from the marketplace since it was >8.16% of my AGI. As I was attempting to file my tax return through H&R Block, it said that I would be penalized $290 unless I apply for an affordability exemption. Then, H&R Block referred me to healthcare.gov and instructed me to fill out the application for 2017 and mail it to the Health Insurance Marketplace. 

 

With that being said, the instructions on the application for exemption state that "You can’t use this application to get this exemption for time in the past. If you need this exemption for months in the past, you can apply for it when you file
your tax return instead." 

 

How should I proceed? This is leaving me confused. Thank you! 

Valued Pioneer
Posts: 4
Registered: ‎01-23-2018

Re: ACA penalty

I forgot to add that the Marketplace wants me to fill out Form 8965 and file it with my 2017 tax return. Is it possible through H&R Block?

Trusted Council Member
Posts: 6,191
Registered: ‎02-23-2016

Re: ACA penalty

Hi jade3,

 

 

 

Welcome to the H&R Block community.

 

You are correct that you will need to fill out Form 8965 to claim an exemption from the health insurance penalty on your tax return.  You'll want to enter exemption code "A" on Form 8965 for the unaffordability exemption.

 

Note that Forms 8962 and 8965 are not ready for e-file yet.  There is an update coming tomorrow and another one on the 27th, so it will be fixed soon.  One of the two updates, and over the past 24 hours or so people have been saying its the one tomorrow although previously I had heard that it was the later one, is supposed to correct the issues with these forms.

 

 

If you have any other questions I'll be glad to help.

 

Louis,

Senior Tax Advisor (Tampa, FL)

Valued Pioneer
Posts: 4
Registered: ‎01-23-2018

Re: ACA penalty

Okay that makes sense, thank you! If the Marketplace will not allow me to fill out the application for exemption since this was for time uninsured in the past, then how do I apply for the exemption when I file with H&R Block? 

Highlighted
Trusted Council Member
Posts: 6,191
Registered: ‎02-23-2016

Re: ACA penalty

jade3,

 

 

 

You're quite welcome.

 

If you go through the interview in the software it will ask you about your insurance.  All you need to do is when it asks which exemptions you would like to apply for tell it that you want to apply for the unaffordability exemption.  Then answer the questions that it asks.  The software will generate Form 8965 for you and it will automatically remove the penalty from your tax return.

 

If you're using the desktop software then you can fill out the actual form yourself or go through the interview, whichever you prefer.

 

The unaffordability exemption is one of several exemptions that you don't actually need to apply for.  It is granted automatically on your tax return with the completion of Form 8965.