The flap over last year’s open enrollment under Obamacare may not be the biggest annoyance for many people. Filing 2014 tax returns may top it all, especially for those who enrolled through an exchange.
Subsidies to premiums are based on household income and you are asked to estimate in advance; get it wrong and you owe money retroactively when you file your tax return. In addition, the idea that the penalty for going without coverage is only $95 is wrong.
Bottom line is that Obamacare added much more complexity to the tax filing process for very average Americans. You’ve seen the ads on TV; they are not kidding.
What happened to my tax refund? We sent it to the insurance company‼️
As I said before all this could have been avoided if they had set up the premium subsidy process the same way the Medicare income based premium works. That is based on actual income from the tax year two years before the premium year. In other words, the 2015 Part B premium is based on 2013 income. It’s all automatic, beneficiaries don’t need to do a thing.
The new year has brought a new sort of commercial to our televisions: ads urging people to check with tax preparers about the potential consequences of Obamacare. H&R Block is offering free Obamacare consultations tomorrow. I’ve written before that the big Obamacare event of this year will not be the exchange enrollments, but tax season, when people who got too much in subsidies find out how much money they owe the government (and been told by a tax preparer that it was even worse than I thought). Tax preparers, to judge from my Twitter feed, have been panicking for months. But now they face the Herculean job of communicating that panic to the public.
There’s been a lot of talk about the “hidden taxes” in the Affordable Care Act, but here’s one I hadn’t thought of before or seen mentioned anywhere: the sudden need for folks with simple tax returns to avail themselves of the services of a paid professional. If you have no income outside a modest salary, and not much in the way of potential deductions such as huge mortgage interest or state tax bills, then there was really no reason to use a tax preparer. Even the mathematically challenged should, with the aid of a calculator, be able to fill out their 1040EZ forms just fine. But Obamacare has introduced a significant level of complexity into the taxes of lower-middle-class wage earners. More of them are going to need an accountant to negotiate the process — or risk owing the government hundreds of dollars because they didn’t fill out the forms correctly.
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