Miami-Dade County

New tax forms required by Obamacare confuse some filers

Healthcare tax forms 1095-A, 8962 and 8965 that consumers who purchased Obamacare through the marketplace will have to fill out for the first time this year to reconcile their advance tax credits or file an exemption.
Healthcare tax forms 1095-A, 8962 and 8965 that consumers who purchased Obamacare through the marketplace will have to fill out for the first time this year to reconcile their advance tax credits or file an exemption. THE MIAMI HERALD

The annual tax season grumble is a little louder this year with the addition of three forms consumers will have to fill out to report their healthcare coverage for the first time.

Under the Affordable Care Act, those who purchased coverage in the marketplace last year will now be required to fill out some or all of the new forms: the 1095-A, 8962 and 8965.

For about 75 percent of people, the new rules will amount to checking off a box indicating they obtained insurance coverage all year through an employer, Medicaid, Medicare, the Children’s Health Insurance Program or the Veterans Affairs.

For the rest, the new forms will add at least one step to this year’s filings.

And tax preparers across Miami-Dade County agree: Consumers are confused. Really confused.

“OK, it’s terrible,” said Marisol Brooks, owner of Marisol Tax & Accounting in Hialeah.

“Most of them do not even know they had to file a form until I asked,” she said. “For them, it’s like what for and why do we have to do it?”

The answer comes in two parts: tax credits and penalties.

Consumers who signed up for coverage through, were asked to predict their income for 2014. That estimate was used to calculate how much each person could claim in advance tax credits to lower their monthly premiums.

This spring, as consumers file their taxes for 2014, they’ll have to report their actual income and health insurance information in form 1095-A. That information will be used to fill out another form, the 8962, which will compare their predicted income with their actual income for 2014.

If their final income was lower than their prediction, perhaps because they were laid off or lost a job, they will get money back. Those with final incomes higher than they initially reported will see a smaller refund — or may even owe money to the government, an amount that may range from several hundred to several thousand dollars depending on income.

Ileana Tato, senior tax adviser at a Hialeah H&R Block, said that was the case for a client who got a second job during 2014 and did not update the income information on

“Their penalty was quite high,” Tato said

According to Mark Mazur, assistant secretary for tax policy at the U.S. Department of Treasury, 3 to 5 percent of consumers nationwide are expected to receive tax credits for marketplace coverage. This means they will have to fill out additional forms, though they may use software that will simplify the process.

Those who failed to sign up for healthcare coverage for part of the year or the whole year will fill out a form to determine their penalty. About 10 to 12 percent of people will be able to claim an exemption from a penalty — usually due to hardship — by filling out form 8965.

The remaining 2 to 4 percent will incur a penalty of $95 or 1 percent of their household income, whichever is greater, Mazur said. Next year, that penalty will go up to $325 or 2 percent of household income.

Gretel Perez, tax supervisor at Perez-Abreu, Aguerrebere, Sueiro, Torres, P.L. consulting firm in Coral Gables, said her firm has begun sending information to clients about bringing in their forms and supplementary health insurance documents for tax filings this year.

“It is challenging and we are are working on it,” Perez said. “They are relying on our advice to know how to proceed.”

Liberty Tax Service, a national company, called consumers in December to let them know they were going to get the 1095-A form in the mail early this year as part of the company’s educational campaign that has helped buffer some of the commotion, said Chuck Lovelace, vice president of affordable care for Liberty Tax.

But tax preparers, such as Brooks in Hialeah, agreed more consumer education will be needed.

“Whenever I get my clients the first thing I ask is, ‘Do you have health insurance?’” Brooks said. Then she asks them the source of their coverage.

That, she said, is when the confusion begins.

Follow @MHhealth for health news from South Florida and around the nation.

This story was produced in collaboration with Kaiser Health News, an editorially independent program of the Kaiser Family Foundation.

The new forms:

1095-A: Where consumers will report their basic healthcare information including plans, length of coverage, final 2014 income, monthly premiums and amount of advance tax credits used toward lowering premiums.

8962: Where consumers will compare their predicted 2014 income with their final 2014 income to determine what they receive in tax credits. Those with actual incomes lower than predicted will get money back, while those with higher incomes than predicted will owe money.

8965: Where consumers will claim an exemption from a penalty for failing to have healthcare coverage for part or all of 2014.

Online resources for filing your taxes: Provides a variety of resources for individuals and employers filing their taxes this year, including additional information on the new forms, tools to determine eligibility, a full list of penalty exemptions, links to filing online and links to finding local help. Includes a variety of resources, including a year-by-year breakdown of the effect of the Affordable Care Act on consumers’ taxes, and calculators to estimate tax credits and penalties for not obtaining coverage. Has a simplified breakdown of the Affordable Care Act tax requirements in a question-based system to guide consumers through the tax filing process. Affordable Care Act forms are free of charge. Tax preparers can also help prepare for filing through the “Understanding the Affordable Care Act” resource.