Dear Friends & Colleagues,
Individual Mandate (Penalty and Exemptions) Toolkit
Penalty myths abound! We continue to discuss the individual mandate in the Affordable Care Act (ACA) – and the associated tax penalty with our tax customers. Many uninsured taxpayers are shocked to learn that their penalty for lacking minimum essential coverage could be a LOT more than $95 in 2014. In fact, an taxpayers uninsured for the year would typically be about 1% of their income in penalties. That fact runs counter to the most common perceptions about the ACA’s penalty provision.
Okay, so the penalty is complex and often misunderstood – but what about the exemptions? Unfortunately, HHS created about eight exemption categories– one of which could apply to individuals based on thirteen criteria with different application instructions for each – and a total of about eight different forms to consider. To its credit, HHS drafted an explanation at healthcare.gov/exemptions, which reads at the 9.5-grade reading level. While substantially higher than the Department’s sixth-grade target, it is a vast improvement over former drafts. Even so, the exemptions remain frightfully difficult to explain, and HHS has created a cumbersome that taxpayers must use to apply.
Now there is a much easier way to explain the penalty and the exemptions! To help with this educational effort, we created the attached toolkit. Our toolkit includes the previously-released penalty explanation, worksheet, and example – and we have added two new infographics to help explain the exemptions. These materials are now also available at http://www.jacksonhewitt.com/Resource-Center/Healthcare-and-Taxes/Healthcare-Penalties-Exemptions/. Please feel free to use, reproduce, and/or distribute these documents as much as you like; we just ask that you do so without modifying the content or format. Of course, we also encourage all users to discuss the results with a trained tax preparer before drawing conclusions.
The ACA is tightly linked to taxes – and we at Jackson Hewitt are focused on helping American families with this and all aspects of the tax code. Please feel free to contact me at email@example.com or 615-761-6929 if I can be helpful in any way.
* For reference, HHS published the proposed NBPP at 78 Fed Reg. 72322, 72388 (Dec. 2, 2013), which is available at https://www.federalregister.gov/articles/2013/12/02/2013-28610/patient-protection-and-affordable-care-act-hhs-notice-of-benefit-and-payment-parameters-for-2015. Please note that HHS does not necessarily need to clarify the open enrollment period in the NBPP; it simply chose to announce this proposed policy change in this vehicle. HHS could presumably change open enrollment dates even after publishing the final NBPP.
** To learn more about the penalty, please visit