Health care exemption process creates confusion

By Ricardo Alonso-Zaldivar
Associated Press

WASHINGTON — Millions of Americans may qualify for waivers from the most unpopular part of President Barack Obama’s health care overhaul. But getting that exemption could be an ordeal.

Community groups are concerned about a convoluted process for waivers from the law’s tax penalty on people who remain uninsured.

Not everyone is complaining, however: Tax preparation companies are flagging it as a business opportunity.

The law’s requirement that Americans carry health insurance remains contentious. Waivers were designed to ease the impact. But while some exemptions seem simple, others will require math calculations.

Some involve sending in the application, by mail, and supporting documents, such as copies of medical bills, police reports, obituaries, utility shut-off notices – even news articles. Consumers will have to dig up the documentation – it’s not like filing the W-2s they get from employers.

Two federal agencies have roles, each with its own waivers and time schedules. Some people will apply directly to the Internal Revenue Service when they file their 2014 tax returns next year. They’ll use a new Form 8965.

Others can start now and seek an exemption through If it’s approved, they’ll get a number to put on their IRS form later on. It will all come to a head this tax-filing season.

Hailed by Democrats as the fulfillment of historical aspirations for covering all Americans, the Affordable Care Act has turned out to have multiple issues.

The debut of online insurance markets last fall became an embarrassment for the White House. It took two months to get the website working reasonably well.

Waivers are part of the law’s complex relationship with the tax system, an area of potential complications just starting to emerge.

“The process for claiming an exemption is confusing, even for people who do this every day,” said Elizabeth Colvin of Foundation Communities, an Austin, Texas, nonprofit that provides services for low-income people.

“If you are a do-it-yourself person who is going to try it on pen and paper, all I can say is, ‘God be with you,’” said Mark Ciaramitaro, vice president of health care services at tax giant H&R Block.

At Intuit, maker of TurboTax, software engineers and tax lawyers teamed up to create “Exemption Check,” a free online tool for people to see if they qualify. Charges apply later if the taxpayer files through TurboTax.

“I would say that it is complex,” said Sacha Adam, Intuit’s team leader. “That is where we get excited.”

The requirement that individuals carry health insurance took effect this year, alongside the law’s major coverage expansion. Although an estimated 10 million people are no longer uninsured, “Obamacare” remains divisive in the congressional elections. Soon after election day,’s second open enrollment gets underway.

Those who got too big a tax credit this year through will have their tax refunds reduced to pay it back. And those still uninsured will be scrambling to check out penalty waivers.

“Many people are going to need help,” said Zach Reat, director of work initiatives for the Ohio Association of Foodbanks in Columbus. “There’s definitely the potential for people to get tripped up.”