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Millions Hoping to Avoid Obamacare Tax Penalty

As tax season begins conflicting rules over the tax penalties for Obamacare are plunging millions into confusion, especially the working poor who are not eligible for subsidies but do not make enough to afford a new healthcare insurance policy. The confusion has left millions scrambling for ways to avoid fines they cannot afford.

With its mandate that the states expand Medicaid, Obamacare was initially conceived to be uniform across the country but after the U.S. Supreme Court ruled that the states cannot be forced to implement the expansions has created nearly two dozen states where some citizens may fallen into a coverage gap.

Adding to the confusion, the federal government is creating new exemptions to help those who fall in the gap, but many tax preparers may be unaware of the new rules.

The quickly evolving rules may also be absent from some online tax programs that many use to file.

Most understand that for this first year the tax penalty for not having any insurance is one percent of a filer’s yearly income or $95 per uninsured person, which ever is greater. But for the 2015 tax season (coming due in April of 2016) that penalty will increase to two percent of income or $325 per uninsured person in the household.

This year, though, for the two dozen states that fall in the gap, the IRS has hastily released a new form that offers an exemption to the penalty for the nearly four million Americans.

In those states the new formula will allow those with a household income of equal to or less than 138 percent of the federal poverty level to receive an exemption. That is a $16,104 income for an individual or $32,913 for a four-person household.

Illegal aliens and members of Indian tribes now also qualify for the exemption.

Many are still confused over all the changing rules. “It’s a real problem in all the non-expansion states, so we’re trying to provide the best information we can,” Jill Hanken, the director of HealthCare.gov enrollment, told Yahoo! News.

Follow Warner Todd Huston on Twitter @warnerthuston or email the author at igcolonel@hotmail.com

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