I changed jobs in 2014 - ACA tax question

[dvalley]

My Google-fu is failing me, I can't seem to be able to find the answer to my question.

I changed jobs in 2014. I left employer1 on Oct 12, I started with employer2 on Oct 15th. Employer1 covered me until Oct 31st. Employer2 however has a waiting period of 30-days for the health benefits which can start on the 1st of the month following the 30 day period. So I enrolled on Dec 1st. So that would mean I was uninsured for the month of Nov? At the time I didn't think it would be a big deal but as I'm entering my tax info into TaxAct I only get the choice to answer their one question 'were you covered for the entire 12 months' if I say no I get penalized to the tune of over $1k I thought it would be based on how many months you didn't have insurance? May be I'm missing something.

Any help would be greatly appreciated

 

[ziggy29]

If you had a gap in coverage for less than 3 consecutive months during the year, you are likely exempt from the penalty. This is consistent with the ACA's requirement that employer coverage not have a waiting period exceeding 90 days:

Health Reform FAQs | The Henry J. Kaiser Family Foundation

 

[jim584672]

http://www.irs.gov/Affordable-Care-...he-Individual-Shared-Responsibility-Provision

Short coverage gap. You went without coverage for less than three consecutive months during the year. For more information, see question 22.
22. What qualifies as a short coverage gap?
In general, a gap in coverage that lasts less than three months qualifies as a short coverage gap. If an individual has more than one short coverage gap during a year, the short coverage gap exemption only applies to the first gap.

27. How do I report or claim a coverage exemption on my tax return?
You will have to account for coverage exemptions when you file your 2014 federal income tax return.
You claim or report coverage exemptions on Form 8965, Health Coverage Exemptions, and file it with your Form 1040, Form 1040A, or Form 1040EZ.

http://www.irs.gov/instructions/i8965/
http://www.irs.gov/pub/irs-access/f8965_accessible.pdf

 

[MBSC]

My version of TaxAct split the healthcare questions into two parts. The question you reference was very early in the Q&A process. Later, after entering wage, interest, and dividend information, more detailed healthcare questions were asked in order to complete Form 8965. In the TaxAct section for completing Form 8965, you should enter Exemption Code 'B' for Short-term Coverage Gap.

Form 8965 instructions: Instructions for Form 8965 (2014)

 

[dvalley]

Thank you so much guys!

@SCGame you were right, as I went forward it asked me the months that I didn't have coverage so I selected one month. They penalized me a little over $100 for it. So I guess the 3 month exemption doesn't apply to everyone, it must be income based? Good to know for next time.

It also asked me about dependent's coverage who I'm NOT claiming on my return. My ex claims the dependent who had coverage throughout so I'll input the information and test if it changes anything if I select a month or two of missing coverage. Another good one to know for future.

 

[jim584672]

You need to fill in form 8965 to get the exemption so you have no penalty.

 

[rbmrtn]

Thank you so much guys!

@SCGame you were right, as I went forward it asked me the months that I didn't have coverage so I selected one month. They penalized me a little over $100 for it. So I guess the 3 month exemption doesn't apply to everyone, it must be income based? Good to know for next time.

You should have no penalty, short gap is less than 3 months. Maybe you didn't finish the form ? there should a line to enter an exemption on form 8965, part III


Questions and Answers on the Individual Shared Responsibility Provision

CMS paper on short gap coverage

https://marketplace.cms.gov/technical-assistance-resources/exemption-gap-in-health-coverage.pdf

 

[MBSC]

They penalized me a little over $100 for it. So I guess the 3 month exemption doesn't apply to everyone, it must be income based?

You should not have a penalty. It sounds like you skipped one of the screens to enter data. The process on my version of TaxAct is:

From the Federal Q&A tab, click 'Taxes', then click 'Review' next to Individual Shared Responsibility. Answer the question about coverage in all 12 months with 'No' and check the months you DID have coverage.

The next screen is non-dependent coverage which didn't apply to me so I continued to the next screen for Coverage Exemptions. Select 'Add new Form 8965-Part III.' Then select Exemption 'B' (Short coverage gap) and check the exempt month. The next screen for Coverage Summary says my penalty is $0.

 

[dvalley]

Awesome guys! I found the form using SCGame's instructions. If I entered the Q&A process differently it didn't give me the option, weird. This is my second year using TaxAct and I find it to be less intuitive than TurboTax but not horribly bad...yeah I know I'm blaming the software lol

Well thanks again guys, you saved me a bunch of $$