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Financial Planning > Tax Planning

What H&R Block says about PPACA

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H&R Block (NYSE:HRB) is looking at the Patient Protection and Affordable Care Act (PPACA) as a chance to attracts tens of thousands of people to its brick-and-mortar offices.

The tax-preparation firm is holding free, live-human PPACA tax advice sessions — from 9 a.m. to 9 p.m. Thursday — at about 10,000 of its offices.

No appointment is necessary, the company says.

See also: For tax preparers, PPACA may bring a paperwork feast

An executive at an H&R Block competitor, Liberty Tax, estimated in September that about 25 percent of its customers would have to file some kind of PPACA form.

See also: PPACA health subsidy could trigger surprise tax bills

Bill Cobb, president of H&R Block, noted that the moderate-income consumers who use the PPACA health insurance premium tax credit will be more likely to need some kind of professional help, because they will no longer be able to file their returns on a Form 1040EZ.

For a look at what H&R Block is now saying about PPACA and current tax filing season, read on.


1. Consumers are still confused about PPACA

H&R Block commissioned a survey of 1,040 adults 18 years of age or older who live in the continental United States in late October.

Many consumers said they thought they understood the PPACA advance premium tax credit (APTC) system — but H&R Block analysts believe the answers show that many of those consumers are lost.

About 61 percent of the consumers who used an APTC to reduce the out-of-pocket cost of PPACA exchange plan premiums said they are confident they estimated their income correctly when they applied for the tax credit — but 66 percent did not realize the APTC calculations would be based on their 2013 tax return information, according to Kathy Pickering, the head of the company’s in-house tax think tank.

See also: RS explains PPACA for plain folks


2. Consumers still think the penalty for being uninsured, or underinsured, is just $95

Originally, many of the policy specialists struggling to explain PPACA said taxpayers with income over a certain level who failed to qualify for an exemption and failed to have “minimum essential coverage” in 2014 would pay a penalty of $95.

The actual penalty for an individual will be the greater of $95 per person or 1 percent of income over a $10,000 threshold, up to a limit equal to the cost of exchange plan coverage. For a single taxpayer who earns $40,000, for example, the penalty would be about $300. The maximum monthly penalty, for a “shared responsibility family” with five or more members, is $1,020. 

Blank stare

3. Some survey participants had not heard of the PPACA penalty at all

About 79 percent of the consumers surveyed at least pretended that they knew the PPACA mandate penalty existed — but 19 percent did not even pretend that they had heard of it.

Twelve percent of the survey participants who claimed their households had household income over $100,000 per year said they had not heard of the mandate penalty. 

See also: Gallup: Many uninsured adults unaware of PPACA mandate

Baby on phone

4. For this topic, consumers like physical offices

About 53 percent of the consumers surveyed said they would start boning up on PPACA tax implications by doing an Internet search — but 42 percent said they would visit a tax preparer’s office.

The percentage who said they would visit a tax preparer’s office increased from 35 percent a year earlier.

Only 20 percent said they would call a telephone hotline for help.

One sign of how lost some of the consumers are: About 35 percent said they would deal with their confusion by reading the text of PPACA. 

See also: ‘We don’t need no education…’


5. H&R Block is attracting consumers with brick-and-mortar content marketing

Marketers often talk about “content marketing” as if the only way to do it is to put articles, tweets or quizzes on the Internet.

H&R Block is trying to get prospects in the door by offering each of them a “free, personalized ACA Tax Impact Analysis” created in a brick-and mortar office.

“H&R Block ACA Specialists can help consumers determine if they qualify for one of numerous potential government exemptions to the ACA, and if so, help them with the application process,” the company says.

See also: Distributors roll out PPACA plans


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