If you're covered under Obamacare, listen to this free podcast before you try to decipher the ridiculously complicated tax form...Your humble host has previously reported on his test-drive of health insurance under the Affordable Care Act: high prices for second-rate coverage that delivers fat profits to the insurance industry.
Today, we take a close look at the tax form that Obamacare users are required to file by April 15--no extensions allowed. It is unnecessarily complicated, introduces new tax terms, and the instructions play hide and seek with a new data table that delivers unexplained decimal factors.
Is this some form of group punishment cooked up by devious bureaucrats for the class of "takers" who enrolled in Obamacare?
CAVEAT: Your humble host does not offer tax advice, and this podcast is offered only for information purposes. I do suggest that most people get professional help with this byzantine form.
First, the exchange you bought the coverage from sends you a statement, tax form 1095-A. Covered California, the exchange here, botched thousands of these reports, and I got the corrected version on March 21. This data is used to fill in form 8962, entitled "Premium Tax Credit".
But before you can do that, form 8962 requires you to research the federal poverty level for your area. When you look it up online (assuming you have internet access), you learn that it's the same rate for the 48 continental states, so why didn't they just list it on the damn form? Is this just to remind us that we're not rich?
Form 8962 introduces 2 new tax terms: Modified Adjusted Gross Income, and "applicable figure". MAGI (not referring to 3 wise men) is actually defined in the instructions for 8962; as you will hear, "applicable figure" is so mysterious that it is not defined, and you can only find your personal "applicable figure" if you click on "specific instructions for line 7".
If you can navigate this crazy process, you might discover that you get an additional tax credit, like I did; or, that you owe the IRS more money. Until experiencing this, I had not realized that the Affordable Care Act was not only a gift to the for-profit health insurance industry, but also to H & R Block and other tax preparers.