If you filed taxes and paid penalty, you may be able to get money back

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If you went more than three months last year without health insurance and you’ve already filed your federal tax return, you may have paid too much. If you’re preparing to file, there is an exemption you may want to be aware of. 

A couple of tax professionals said they’re doing a lot of amendments in East Tennessee to correct a penalty added to taxpayers’ 2018 tax bill under the Affordable Care Act.

While the penalty for not being insured was gutted by the Republican-led Senate and House in 2017, it doesn’t exclude you from the penalty until 2019 filings (tax season 2020).

Tax professionals still finding exemptions

Mary Edwards is ready for the end of tax season. This year she’s seen more changes than any other year in her career. From complications with a new 199-A deduction to clients disappointment about not being able to itemize to the Affordable Care Act penalty, she said it’s a struggle to find enough time to check and double check all the new requirements. 

The silver lining in all the confusion and anxiety, she said, is that more people are counting on tax preparers due to the Tax Cuts and Jobs Act and all the changes that come with it. 

Edwards touted the advantage in counting on a tax professional over free online software because she said they’re able to personalize questions that may be new on tax forms, so they’re easier to understand. It also helps you ensure you know all your filing options, she explained. 

She’s still finding exemptions. She didn’t catch until recently, even after undergoing continuing education seminars required to maintain a license, an exemption that prevents many in East Tennessee from paying the ACA penalty.

We want to keep you compliant, but we also want you to pay the minimum amount that’s legally allowable for you. We don’t want you to pay extra, she said. 

She said she just heard about a provision, she believes was added around May 2018, that allows people who live in a county with a single health insurance provider through the marketplace to claim a hardship exemption due to a lack of coverage options. This means people who didn’t have insurance for more than three months, who would normally be fined, are off the hook if they live in one of those counties. 

Knox County residents fall under this healthcare hardship exemption

Edwards confirmed Knox County is one that only had one insurance option (Blue Cross Blue Shield). You can call your local ACA representative to find out how many options your county had in 2018. 
Before, she explained, the hardship exemption including things like a death in the family, homelessness, or bankruptcy.

A filer also had to apply for an exemption and file with an approval number from the federal government. According to Healthcare.gov, an application is no longer mandatory. 

Edwards is happy for her 10-15 clients, for whom she’ll be filing an amendment because they’ll get more money back in light of what she’s discovered, but she’s frustrated to have to make the change. She feels something got lost in the shuffle and doesn’t know who to blame for the ball drop. 

She said most people pay around $695 in the penalty, but some of her clients pay thousands. 
She said the turnaround time is slower this year because of the work involved in double and triple checking because the software has a lot of changes.

Edwards advised if you need to file an amendment, to do so through a tax professional, to ensure it’s filed properly. 

Healthcare isn’t always affordable for regular folks

Tina Clouse is one of many Tennesseans who went without health coverage in 2018.

You try to take care of yourself as best you can, hope nothing goes wrong, you do a lot of self-research to try to fix it, but hopefully nothing goes wrong, she said.

She filed a hardship exemption on her taxes, which prevented her from paying a penalty, she said, would have been more than $1,000. 

Clouse is also a tax professional. She works as general manager for a local Jackson Hewitt franchise. She agreed this tax season has been different. 

She researched her options and the options of her clients who went without insurance in 2018. She said if a client determines they went without because of financial hardship, she would recommend claiming the hardship exemption.

Regardless, in a county where one insurance option was available, she said those clients are eligible.

I did research through the marketplace. There is one provider for our county here. I understand that it’s widespread throughout the area. Looking at what my premiums would be, it’s just something that, I weighed the cost, she added. 

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