Survey: Consumers Lack Knowledge of Obamacare Tax Implications

The upcoming tax season will be the first time Americans face penalties for not having health insurance, but a new survey suggests the public is still very much confused about their responsibilities and options.

The upcoming tax season will be the first time Americans face penalties for not having health insurance, but a new survey suggests the public is still very much confused about their responsibilities and options.

Intuit recently polled 2,000 Americans over the age of 18. They found nearly half—48%—did not realize they would need to report their health insurance status on their 2014 tax returns.

Meanwhile, nearly two-thirds of uninsured respondents said they know they’ll have to pay a penalty if they don’t have insurance, but nearly 9 in 10 said they did not realize the deadline to get health insurance in 2014 has already passed. In other words, a person who has been uninsured in 2014 will have to pay the penalty even if they sign up for health insurance during the current open enrollment period. Intuit said doing so would help them avoid the penalty in the 2015 tax year, but not the 2014 tax year.

The new rules are part of the Affordable Care Act’s individual health insurance mandate. And while penalties kick in for the first time next year, the penalty for not having insurance in 2014 is fairly small—1% of income over $10,000 or $95 per family members, whichever is higher. The penalties increase in later years.

There are also exemptions that allow some uninsured to avoid the penalties altogether, though Intuit found more than half of the uninsured people polled—56%—didn’t realize the exemptions exist.

“These numbers indicate that even with open enrollment in full swing many Americans still don’t know the correlation between their healthcare and taxes,” said Sacha Adam, ACA product leader for Intuit’s TurboTax.

The Intuit survey found about 9 in 10 Americans have health insurance. The insured rates were slightly lower in the southern US and slightly higher in the northeast. Intuit also found that people who used the government marketplaces to buy insurance last year were significantly more likely than non-marketplace users to be aware of the tax credits available to people who buy their own insurance.