Questions About Tax Time? Here Are Key Answers for the Enrollment Community

By Zachary Baron

Winter may still be with us, but tax season is in full bloom! Enroll America has long believed that leveraging the connections between tax filing and health coverage enrollment is an important component of year-round outreach. However, we also know that many in the enrollment community do not consider themselves tax experts, and have several questions about how consumers will be affected when they file their taxes this year.

Last month, Enroll America held a webinar with national and local tax preparation partners to discuss what to expect and new opportunities for the enrollment community this tax filing season. We received numerous questions from webinar participants that are representative of the types of questions enrollment stakeholders are raising across the country. We’ve provided some key answers to common questions below that will be instructive as enrollment organizations work with consumers over the next few months.

Q: A consumer I worked with couldn’t qualify for financial help because of their state’s decision not to expand Medicaid. Will they need to pay a fine on their taxes?

A: Nearly 3 million Americans are currently in the “coverage gap” — that is, they are ineligible for Medicaid or financial help through the marketplace. But many of these consumers still file their federal and state income taxes so that they can claim other vital tax credits, such as the Earned Income Tax Credit or the Child Tax Credit. Fortunately, consumers in the coverage gap will not need to pay a fine on their taxes if they don’t have health coverage.

Consumers without coverage can qualify for various exemptions (meaning that they aren’t responsible for paying the fine). One specific exemption was created for people in the coverage gap. The easiest way for affected consumers to claim that exemption is by entering the appropriate code on a specific form that is part of the federal income tax return. Online tax software and other in-person tax professionals can help consumers navigate this situation.

Q: What happens to the consumers I worked with who enrolled in Medicaid last year? Do they need any special form to file their taxes?

A: Most taxpayers with Medicaid (and those with kids enrolled in the Children’s Health Insurance Program [CHIP]) will simply be able to check a box on their tax return indicating that their entire household had year-round coverage. Consumers enrolled in Medicaid or CHIP may receive form 1095-B in the mail (which is new this year). However, consumers do not need the 1095-B to file their 2015 tax return. Consumers should simply check them for accuracy (if they receive them) and keep them for their records.

This is much different from the process for marketplace enrollees. If consumers purchased health insurance through the marketplace, they will receive a 1095-A in the mail from the marketplace (and it will also be available online through their account). Consumers enrolled in marketplace coverage need this form before sitting down to file their taxes. Filing taxes and reconciling tax credits is required in order to maintain eligibility for tax credits in future years. Consumers who fail to file their taxes appropriately can still take action at a later date to maintain their financial help by filing the necessary forms and attesting to doing so on their marketplace application, but by far the best option is to file and reconcile on time, during the regular tax filing season.

Q: Where do I direct consumers who are looking for free tax preparation services?

A: The Volunteer Income Tax Assistance (VITA) Program offers free in-person tax help to lower- and moderate-income people. You can find free tax preparation in your area by entering your ZIP code here. For consumers more comfortable completing the process online, they can choose from several free online tax filing software options if they earn less than $62,000 per year. There are also several in-person commercial tax preparation options for consumers to consider.

For further answers to questions like these and ways that enrollment groups can develop partnerships with tax-focused groups, makes sure to check out the recording and slides from last month’s webinar!

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