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January 31, 2008
THE NEW MASS HEALTH CARE LAW
In April 2006, a new law was passed that requires most Massachusetts residents to get health insurance. The goal of this legislation was to reduce the number of uninsured individuals living in the Commonwealth by making affordable health insurance available to everyone. Watch for form 1099-HC in the mail as it will have information that is necessary to complete your tax return. Give it, as well as all other 1099 and W-2 forms, to your tax preparer.
The Massachusetts Department of Revenue will be monitoring the progress of health insurance for all by requiring a new tax form, Schedule HC. Early results from the Department of Revenue show that one out of five taxpayers filing a paper return and 10% of those filing electronically have failed to include the Schedule HC. For those who file their income taxes electronically, their returns have been rejected. People who mailed in paper returns are having their returns held by the Department of Revenue as incomplete returns, and will not be processed until Form HC is submitted by the taxpayer.
A public hearing is scheduled for the regulations this new law, also known as 830CMR111M.2.1, on February 4, 2008 at 12p.m. in the Gardner Auditorium, State House, Boston. The proposed regulation is posted on the Department of Revenue’s web site, www.mass.gov/dor.
For tax year 2007, the penalty for not having health insurance is the elimination of your personal exemption. For 2007, the personal exemption is $4,125 for a single and $8,250 for a married couple. Based upon our 5.3% income tax rate, this equals a $219 penalty for a single taxpayer, and $438 penalty for a married couple who do not having health insurance. In 2008 the penalties will be larger for failure to get health insurance. Starting on January 1, 2008, the penalty will be computed monthly, and be as much as one-half of the monthly health plan premium.
There a couple of exceptions to the penalty provisions. The first is a religious exemption. I’m not sure what religion advocates not seeking medical help when you are sick, but if you belong to it, no health insurance is required. Of course, the regulations go on to say that even if you belong to that religion, if you got sick during the year and saw a doctor, even if it was in an emergency room, you will lose your exemption to the penalty.
The hardship exemption is the other exception to the penalty provisions. If, according to your income, you are deemed to be able to afford health insurance, but due to extenuating circumstances, you really can not afford it, you may apply for a Certificate of Exemption based upon your hardship.
For more information, go to the Massachusetts Department of Revenue web site at www.mass.gov/dor. There is an informative virtual tour that can guide you through the requirements of this new law.
This article gives general information and not specific advice on individual matters. Persons wanting individualized advice on matters discussed should contact an advisor experienced in those matters. To the extent this article provides information on legal matters, it is based on law in effect in Massachusetts on the date of posting (laws in effect in other states are often quite different).
Ronald H. Surabian is a CPA and attorney who works at the Elder Law Center in Saugus, Massachusetts. He also holds Masters in accounting and a Masters in tax law. He currently serves on the board of directors of the Massachusetts Chapter of the National Academy of Elder Law Attorneys. If you have any questions please call me at the Elder Law Center, One Essex Street, Saugus, MA 01906 (781)233-4444. To view this or any prior article, please visit our web site at www.elderlawcenter.org