Are You Covered?

Bay State residents must prove they have health insurance to avoid a penalty on their 2007 tax returns, with increased penalties for the uninsured in 2008.

By: State: Massachusetts

The Bay State's landmark health care reform law states that residents age 18 and over must have health insurance. And, if you don't, then come tax time, you will likely face a penalty.

What's the penalty?

• For 2007: If you did not have health insurance by December 31, 2007, you will lose the personal exemption on your 2007 Massachusetts income tax return. This tax benefit is currently $219 for an individual taxpayer.
• For 2008: If you do not have health insurance at any time in 2008, you will pay a penalty on your 2008 Massachusetts income tax return. The penalty equals one-half of the cost of the lowest priced plan available in your income range through the Commonwealth Health Care Connector (the Connector) as of January 1, 2008. The penalty will add up for each month that you don't have a health plan in 2008, and is capped annually at $912.

I have health insurance

When completing your 2007 Massachusetts income tax return, if you're 18 or over, you must be able to show that you had health insurance by December 31, 2007.

You will need to file Schedule HC, Health Care Information with your state tax return. If you have private health insurance, your provider will send you Form 1099-HC, Massachusetts Health Care Coverage; this form will contain certain information to complete Schedule HC.

I didn't have health insurance in 2007

If you didn't have health insurance by December 31, 2007, you will most likely lose the personal exemption on your 2007 Massachusetts income tax. That's a $219 penalty.

There are a few exceptions:

1. If you were granted a hardship waiver (certificate of exemption), or
2. If you completed the Commonwealth Health Care Connector's Affordability Tool—and it was found that the lowest cost plan is still too expensive for you.

I don't have health insurance in 2008

If you don't have health insurance in 2008, you face a greater penalty than in 2007. It will equal one-half of the cost of the lowest priced plan available in your income range through the Commonwealth Health Care Connector http://www.mahealthconnector.org as of January 1, 2008. The penalty will add up for each month that you don't have a health plan in 2008.
 
The penalty, in 2008, is capped at $912—which is especially important for residents age 50–64. For example, a 60-year-old uninsured resident of Boston, who would pay more than $4,600 a year for health insurance provided by the state, could have faced a $2,300 penalty. But, the maximum possible penalty is $912 for all residents.

I want to avoid the penalty in 2008

If you have health insurance that meets the minimum standards, you will not be penalized. To avoid the penalty in 2008, you have three basic options:

1. If you don't have health insurance, sign up. Find out what plans are available to you. The Commonwealth Health Care Connector  has health insurance choices for individuals and families. These plans carry the state's Seal of Approval for quality and affordability. You may also purchase plans through approved Massachusetts health insurance carriers, or options may be available through your employer. Contact the Connector today.
2. If you believe the Connector's plans are too expensive, complete the Affordability Tool to find out if you can get an exemption based on affordability.
3. If you have a hardship, apply for a Certificate of Exemption through the Connector.

Tax Filing Resources

Massachusetts Department of Revenue

Schedule HC Instructions and Schedule

Schedule HC

Health Care Resources

Visit the Connector today and:

1. Get help finding the right health plan,
2. Complete the affordability tool or,
3. Apply for a certificate of exemption and avoid penalties for 2008.

You can also call toll free 1-877-MA-ENROLL (1-877-623-6765).

Related Articles

Commonwealth Health Care Connector (The Connector)

Massachusetts Department of Revenue

Health Care for All