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Health Care Law Changes 2014 Tax Season: Filing is the first step

Instead of thinking April 15 is Tax Day, many filers begin preparing their taxes as soon as possible so they can claim their refunds. By law, employees must receive their W-2 and 1099 tax forms by January 31 of each year. By filing early, not only will you beat the April 15 deadline to file, you may receive any eligible refund well before the rush of other filers across the country and state.


Most wage earners are required to files tax returns regardless of immigration status. For undocumented resident’s the process requires additional steps to comply with the law, but with help from trusted advisors can be completed. Since any undocumented immigrants cannot obtain a Social Security Number, they can apply for Individual Taxpayer Identification Number (“ITIN”) to file their income tax returns. Workers can get an ITIN by including IRS form W-7 the first time you file a tax return. Filing taxes could help in the future when seeking permanent residency. If a permanent resident applies for U.S. citizenship, the U.S. Citizenship and Immigration Services (USCIS) will ask you for proof of tax filings.


Undocumented residents can apply to receive an ITIN through the Internal Revenue Service. ITINs can be used for addition purposes, but do not provide resident status. The IRS only reports necessary information when requested by external federal agencies, but there are several consumer protections built in that prevent the IRS from turning over information to external federal agencies.


This year and forward, all filers will need to indicate if they had health coverage in 2014. Undocumented immigrants do not need to verify their coverage, but need to fill out a form that confirms they are exempt from the insurance mandate in the Affordable Care Act that requires insurance. Undocumented immigrants are also restricted from applying for health coverage through the exchanges and receiving subsidies to help with the cost. California allows certain protected status-eligible immigrants – including Deferred Action for Childhood Arrivals (DACA) and Deferred Action for Parental Accountability (DAPA) – to receive state-only Medi-Cal, but it is not required.


This year is the first year tax filers will be penalized if they do not have coverage. A new line on the 1040 form and subsequent forms will help demonstrate if filers have coverage.They are subject to the Shared Responsibility Provision. The penalty is applied to those who can afford health coverage and do not have it, or those who have ignored getting coverage, but some exemptions exist.


Under the provision, Shared Responsibility Provision, a taxpayer is potentially liable for him or herself, and for any individual the taxpayer could claim as a dependent. Children in every family must have minimum essential coverage or qualify for a coverage exemption for each month in the year. If they aren’t covered, the parents who claim the child as a dependent for federal income tax purposes will generally owe a fee for the child.


This year the penalty is 2% of household income or $325 per person whichever is greater, but penalties will begin to climb next year. Also, filers will owe a share of the penalty if they or their dependents do not have coverage during a portion of the year. They will pay 1/12 for each month they or their dependents do not have coverage if they do not qualify for a coverage exemption.


It is important that all uninsured Californians know this and take steps now — before open enrollment through Covered California ends on February 15— to avoid significant penalties when they prepare their 2015 taxes due next year. Medi-Cal enrollment is year-round and meets the insurance coverage mandate.


Covered California – the state’s health insurance marketplace for individuals – provides options and information about health care plans for consumers. The Open Enrollment period ends soon –  on February 15, 2015. Individuals may enroll in Covered California after the window closes only under certain conditions, such as if the person lost employer-sponsored coverage or had a change in family circumstances.


Medi-Cal, unlike Covered California, enrolls eligible Californians continually through out the year. There is no reason to wait for an emergency to get coverage. Medi-Cal is the largest Medicaid program in the country, serving almost 11 million Californians. As part of the Affordable Care Act, California expanded Medi-Cal to many populations that may have never had access to affordable health coverage before. Many of California’s newly eligible do not know that they can get health coverage or know how to access health care services.


2015 marks the implementation of penalties for not having health coverage. Get ahead of the curve by doing your homework. Now is the time to find out what programs are available for you and get the help you need to get enrolled. Visit your county social/human services office, a community health center, or find a certified enrollment counselor to help you navigate coverage. Don’t forget to keep tabs on renewing coverage and make sure and complete any forms the county sends you to renew your Medi-Cal coverage.