Health

This year’s tax season will be full of questions for people who signed up for Kynect, Kentucky’s health insurance exchange, and those who are uninsured.

For the first time, people will have to indicate on their tax form if they had health insurance on their tax return.

“I think because this is new, we’ll probably need to do a lot of outreach and education for folks,” said Carrie Banahan, executive director of Kynect.

More than 50,000 people in Kentucky received an advanced premium tax credit to help them pay the premium for their health insurance plan,  Banahan said. They will receive Form 1095-A in the mail by the end of January.

If Form 1095-A sounds unfamiliar to you, it’s for good reason. It’s a new form also known as the Health Insurance Marketplace Statement. It provides filers with the amount of APTC paid during the year to their health plan.

In order to claim the premium tax credit, filers must also submit Form 8962, which calculates how the 2014 APTC compares to the amount of premium tax credit insurers were actually eligible for.

This is where filing may become confusing, says Noelle Hinton, tax specialist at H&R Block in Louisville.

“It’s really based on whether they overestimated or underestimated their income. I find that it’s going to be more dizzying for those who have no insurance whatsoever,” Hinton said.

Hinton said that if a person overestimated their income when they signed up for Kynect, they may receive additional tax credits that could be claimed as a refund.

If someone underestimated their income, too much of an APTC may have been paid on their behalf. Form 8962 will reconcile what the tax credit should have been and determine what needs to be repaid to the IRS.

And as for the 11.9 percent of uninsured Kentuckians? They should be prepared to pay a fine or prove their eligibility for an exemption.

“You’re  required to have insurance at least for nine consecutive months in 2014—if not you’re penalized,” Banahan said.

The 2014 penalty for not having coverage means that people will have to pay 1 percent of their annual household income or $95 per person for the year, whichever is higher. Children under 18 will each cost households $47.50.

The fee in 2015 will increase to 2 percent of a household’s annual income or $325 per person, whichever is greater. The cost of children under 18 will jump to $162.50 per child.

“The penalty is actually going to get worse and worse for people who have not complied with the ACA mandate,” Hinton said.

The penalty will increase to 2.5 percent of income, or $695 per person in 2016. It will be adjusted for inflation after that.

There are a number of exemptions that can be claimed to avoid the penalty. Although, unemployment does not qualify as an exemption, people may be eligible for one if the lowest-priced coverage plan available would cost more than 8 percent of their household income.

Banahan said the agency is training contact center employees, Kynectors and insurance agents to answer questions. She also said that the office is planning to host events with agents and Kynectors to answer questions related to the 2015 tax season and health insurance.