The Affordable Care Act (ACA) of 2013 now requires all Americans to carry a minimum amount of health insurance, as prescribed in the new law. This means that millions of taxpayers who are currently uninsured will have to obtain coverage either through their jobs or through the purchase of standalone policies on the health insurance exchange for each state. Those who fail to do this will have to pay a tax equal to the greater of $95 or 1% of their total income that exceeds the filing threshold for their filing status.

This legislation also introduces over 20 new taxes into the code, which filers must learn in order to minimize their own liability. Of course, the tax implications of the new law coupled with the technical and financial obstacles to enrollment are causing many taxpayers to throw up their hands in despair. The acute need for assistance with this matter has prompted several major players in the tax preparation business to proactively assist their customers with both the calculations of possible taxes that they may face and the new enrollment process that they must use to obtain health coverage.

A Volunteer Program

Jackson Hewitt, H&R Block and TurboTax have all implemented corporate programs that integrate the enrollment process for Obamacare, as the federally mandated program is called, directly into the tax preparation process. The U.S. Internal Revenue Service has not mandated that any individual or corporate preparer provide this assistance, but these firms felt that it was an important benefit that they could provide their customers.

The Urban Institute in Washington D.C. issued a report in February 2014 indicating that there are nearly 19 million taxpayers who will qualify for either ACA coverage or Medicare - and this does not count those who are not required to file but must do so in order to get back any amount that they had withheld. Stan Dorn, a senior fellow at the institute who helped to create this report, lauds the move by these firms. “My sense has been that they [government officials] just have a lot on their plate and I’m not sure they’ve fully appreciated the opportunity that tax preparers represent.”

How it Works

Each tax firm has partnered with a different care provider service program in its effort to enroll customers in Obamacare. Jackson Hewitt refers customers to, while H&R Block has teamed up with GoHealth, an online health insurance exchange. Intuit is using eHealth, another online health insurance provider for its Turbo Tax Health program. The actual enrollment process is basically the same for each provider, and it allows customers to enroll in standard qualified policies: Medicare, Medicaid and the Children’s Health Insurance Program (CHIP). Preparers that work at the two tax preparation franchises are trained to ask customers whether they need to calculate the tax for failure to carry coverage, determine whether they are eligible for a tax credit under the plan and then complete the application process for the customer by conducting a short interview.

Jackson Hewitt employees are even trained to fill out all of the paperwork for those who get Medicare coverage and mail it in for its customers. H&R Block has taken a slightly different approach in some of its locations, where it is employing licensed health insurance agents who either work as or with tax preparers to provide independent coverage. All tax preparers are politically neutral on the entire subject and simply inform customers of their obligation to purchase coverage without making any kind of sales pitch. The entire service is provided at no additional charge to customers, and preparers have no financial incentive to offer it to customers. Jackson Hewitt’s system also functions independently of the federal system, so any technical or logistical problems experienced by the latter will not affect the preparer’s ability to enroll customers.

Benefits for Customers

There is perhaps no better time for customers to enroll in Obamacare than while they are doing their taxes. Since much of the information that is needed for healthcare enrollment is also required for tax preparation, preparers can simply transfer this data onto the appropriate health application form directly from the tax program. Experienced preparers who have been properly trained are usually able to complete the entire health enrollment process in just a few extra minutes, thus saving the customers a great deal of time and frustration - and ultimately enrolling a large number of filers who most likely would simply fail to do so.

Perhaps the most important benefit of this form of enrollment may be the taxpayers’ enhanced ability to pay for their coverage on the spot with the money they get from their refund. This is obviously a critical factor for low-income taxpayers who will likely not receive any other type of lump-sum payment during the year that is large enough to cover this cost, and it may be easier for those who might instead apply for coverage when they are also applying for food stamps. And because tax preparers can calculate the tax for the customer during the tax interview, it helps the customer see the benefit of purchasing coverage in this manner.

The Bottom Line

Jackson Hewitt, H&R Block and Intuit have stepped forward to help the public comply with the new requirements set forth by Obamacare with their turnkey enrollment programs. Taxpayers who are struggling with the enrollment process can turn to one of these providers for assistance in this process, although they may be charged a higher price for their tax preparation than what they normally pay. For more information on Obamacare and the taxes that come with it, visit the government’s healthcare website or the IRS website.

Related Articles
  1. Economics

    4 Top Changes Obama Has Made with His Mandates

    Learn how Obamacare, equal pay for women and an executive order on immigration represent some of Obama's biggest changes during his presidency.
  2. Insurance

    State-By-State Comparison Of What You’ll Pay Under Obamacare

    Check out our interactive map to get a better idea of the premiums you'll pay under Obamacare.
  3. Insurance

    Healthcare 2.0 - Obamacare Reboots The Health Insurance Market

    People who want to buy or switch their health insurance will have access to a much wider array of choices through the web, where health insurers will have to compete for our business.
  4. Insurance

    Obamacare Update: Canceled Health Plans And Subscriber Options

    The president's latest change to the Affordable Care Act has subscribers choosing between continuing coverage with an out-of-date plan, accepting their insurer’s proposed plan, or finding health ...
  5. Insurance

    Lowering Your Costs For Marketplace Health Insurance Coverage

    Here, we take a look at how you may be able to lower your costs for health insurance coverage in 2014 though the Health Insurance Markerplace.
  6. Insurance

    Essential Health Benefits Under The Affordable Care Act

    Under the Affordable Care Act, certain preventive health services and these 10 essential health benefits are the minimum requirements for many health insurance plans.
  7. Insurance

    How To Choose Between Bronze, Silver, Gold And Platinum Health Insurance Plans

    Here, we explain the different coverage levels within the new Health Insurance Marketplace and help you choose among the Bronze, Silver, Gold and Platinum health insurance plans.
  8. Insurance

    5 Things You Should Know About The New Health Insurance Marketplace

    Here are five things you should know about the new Health Insurance Marketplace (AKA Health Insurance Exchange), which launches on October 1.
  9. Professionals

    An Overview of Hybrid Long-Term Care Policies

    As the cost of managed care continues to rise a new breed of hybrid life insurance offers a reasonable level of protection at a far more affordable price.
  10. Entrepreneurship

    Taxes in Florida for Small Businesses: The Basics

    Learn why Florida's tax laws make it an attractive place to start a small business, and understand the types of taxes a small business owner must pay there.
  1. What is the annual contribution limit for a 529A account?

    Contributions to a 529A plan are limited up to the annual gift tax exclusion limit, currently $14,000 a year in after-tax ... Read Full Answer >>
  2. Are Cafeteria plans taxable?

    Whether the benefits you receive through your employer-sponsored cafeteria plan are taxable depends entirely on which benefits ... Read Full Answer >>
  3. Why is Panama considered a tax haven?

    The Republic of Panama is considered one of the most well-established pure tax havens in the Caribbean due to extensive legislation ... Read Full Answer >>
  4. Are Cafeteria plans exempt from Social Security?

    Typically, qualified benefits offered through cafeteria plans are exempt from Social Security taxes. However, certain types ... Read Full Answer >>
  5. Why is Andorra considered a tax haven?

    Andorra is one of many locations around the globe considered a tax haven because of its relatively lenient tax laws. However, ... Read Full Answer >>
  6. Do financial advisors prepare tax returns for clients?

    Financial advisors engage in a wide variety of financial areas, including tax return preparation and tax planning for their ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!