Massachusetts Health Connector Appeals Unit

Transcription

1 Massachusetts Health Connector Appeals Unit FINAL APPEAL DECISION Appeal Decision: X Penalty Overturned in Full Penalty Upheld Penalty Overturned in Part Hearing Issue: Appeal of the 2016 Tax Year Penalty Hearing Date: May 8, 2017 Decision Date: June 20, 2017 AUTHORITY This hearing was conducted pursuant to the Massachusetts General Laws, Chapter 111M, Chapter 176Q, Chapter 30A and 801 Code of Massachusetts Regulations 1.02 and the rules and regulations promulgated thereunder. JURISDICTION Any person aggrieved by the assessment or potential assessment of the individual mandate penalty may file an appeal, pursuant to the provisions of Massachusetts General Laws chapter 111M, section 4 and 956 Code of Massachusetts Regulations HEARING RECORD The Appellant appeared for the hearing, which I conducted by telephone. A document was submitted on behalf of the Massachusetts Department of Revenue (DOR) prior to the hearing (Exhibit 1). The hearing record consists of the Appellant s testimony under oath and the following documents that were admitted into evidence as exhibits: Page 1 of 0508-TaxPenaltyAppeal-Docket-Number PA16-2

2 Massachusetts Health Connector Appeals Unit 1. DOR Appeal Case Information from Schedule HC (1 page); 2. Appellant s Statement of Grounds for Appeal 2016 (3 pages, including fax cover sheet); 3. Appellant s Letter in Support of Appeal (1 page, dated 3/3/17); 4. Bank of America Checking Account Statement (4 pages, period ending 1/26/17) (identified by Appellant as Pack 1 ); 5. CapitalOne Checking Account Statement (1 page, period ending 12/31/16) (identified by Appellant as Pack 2 ); 6. CapitalOne Checking & Savings Account Statement (2 pages, period ending 1/31/17) (identified by Appellant as Pack 3 ); 7. UnitedHealthcare Summary of Benefits for 3/1/16 2/28/17 (8 pages); 8. Health Connector s Notice of Hearing (3 pages; dated 4/18/17); 9. Hearing Officer s Open Record Order (1 page, dated 5/8/17); and Final Appeal Decision (Docket No. PA (4 pages, dated 2/24/17). At the conclusion of the hearing I held the hearing record open to obtain additional information from the parties. See Exhibit 9. The Health Connector was requested, within two weeks, to submit copies of any tax penalty appeals decisions for 2014 and/or The Appellant was given another two weeks, until June 5, 2017, to provide any written response to any documents submitted by the Health Connector. The Health Connector submitted a Hearing Officer s tax penalty appeal decision for 2015 that is identified as Exhibit 10. The Appellant did not submit any response to the additional document submitted by the Health Connector. FINDINGS OF FACT I make the following findings of fact based on the testimony and exhibits and reasonable inferences from the evidence, applying the preponderance of the evidence standard. 1. I adopt the facts set forth in Exhibit 1 as my own findings of fact. Exhibit 1 is a computer printout prepared by the Massachusetts Department of Revenue (DOR) that extracts information submitted by the Appellant on Schedule HC as part of the Page 2 of 0508-TaxPenaltyAppeal-Docket-Number PA16-2

3 Massachusetts Health Connector Appeals Unit Appellant s 2015 Massachusetts income tax return. The information in Exhibit 1 is consistent with the testimony and other documentary evidence at the hearing, except to the extent noted otherwise below. 2. I take administrative notice of the financial information set forth in Tables 1 through 6 in the DOR 2016 Massachusetts Schedule HC Health Care Instructions and Worksheets. Tables 3 and 4 incorporate the affordability schedules adopted by the board of directors for the Commonwealth Health Insurance Connector Authority (Health Connector or Connector) for See 956 Code Mass. Regs Table 2 sets forth income eligibility standards for various family sizes at 300% of the federal poverty level, which is the income eligibility standard for the ConnectorCare government subsidized health insurance program. Tables 5 and 6 set forth the tax penalties in effect for The Appellant filed an appeal dated March 3, 2017, from the DOR s assessment of a 12-month penalty for the calendar year The Appellant asserted two grounds for his appeal under the Health Connector s financial hardship regulation: (1) that the expense of purchasing health insurance would have caused serious deprivation of food, shelter, clothing or other necessities; and (2) that Appellant purchased health insurance for 2016 that did not meet the Massachusetts minimum creditable coverage standards ( MCC ) because that is what his employer offered and his circumstances prevented him from buying other insurance that met the MCC requirements. 3. The basis for the DOR s assessment of a 12 month penalty on the Appellant s 2016 Massachusetts personal income tax return is that his health insurance coverage did not meet MCC standards. See Exhibits 1, 2 and The Appellant is employed in Massachusetts by a nationwide television provider service that is based in Colorado. As of July 2017, the Appellant will have worked 14 years for his Employer. Testimony. 1 The DOR Instructions are published online at and are also available in the state income tax forms supplied to taxpayers. See also DOR Technical Information Release (TIR) 12-7: Individual Mandate Penalties for Tax Year Page 3 of 0508-TaxPenaltyAppeal-Docket-Number PA16-2

4 Massachusetts Health Connector Appeals Unit 5. For all of 2016 and for prior years the Appellant has been enrolled in the health insurance plan offered by United Healthcare through his Employer. Testimony. See also Exhibits 7 and For all of 2015 the Appellant was enrolled in the health plan offered through his Employer. In early 2016 the Appellant learned from the IRS Form 1095 that he received that his Employer s health plan did not meet coverage standards. (The Appellant did not submit the notification forms as part of the hearing record for this appeal.) Testimony. 7. The Appellant appealed from the DOR s assessment of 12-month penalty against the Appellant for After a hearing held on November 1, 2016, the Hearing Officer issued a Final Appeal Decision dated February 24, In the Decision the Hearing Officer found that the Appellant had been enrolled in employer-sponsored health insurance coverage for all of 2015, that the Employer s health plan did not meet MCC standards because it did not provide mental health coverage, and that the DOR properly assessed a 12 month penalty because the health plan did not meet MCC standards. However, the Hearing Officer reduced the penalty to 6 months, recognizing that the Appellant was actually enrolled in his Employer s health plan for all of 2015 and that he had made regular premium payments for the employer-sponsored health insurance all of Exhibit 10 (docket no. PA15-578). 8. The Appellant was again enrolled in his Employer s health plan for all of The Appellant pays a $50 premium through payroll withholding every two weeks ($1,300 per year, or $ per month), but he does not know what amount the Employer contributes. The Appellant is also enrolled in a Health Savings Account through his workplace for which the Employer contributes $20 every two weeks ($520 per year, or $43.33 per month). Testimony (The Appellant did not provide any payroll or human resources documentation for these benefits and costs.). See also Exhibit I find that the Appellant s 2016 employer-sponsored health plan did not cover inpatient or outpatient mental or behavioral services and did not cover inpatient or outpatient substance abuse disorder services. I base this finding on the United Healthcare summary of benefits. Exhibit 7, at page 4. Compare Findings of Fact, No. 7, above, and Exhibit The Appellant responded to the notice that his 2015 employer-sponsored health plan did not meet MCC standards by applying to the Health Connector for Page 4 of 0508-TaxPenaltyAppeal-Docket-Number PA16-2

5 Massachusetts Health Connector Appeals Unit coverage. Starting in January 2017 the Appellant was covered by a Health Connector plan issued by Tufts for which he paid a monthly premium in the amount of $ per month. I base this finding on the Appellant s hearing testimony, on his supporting letter (Exhibit 3), and on his checking account statement that shows a Health Connector bill payment in the amount of $ on January 13, Exhibit 4). 11. The Appellant contacted his Employer about the MCC coverage issue and the resulting penalty assessment. He was informed that the Employer would not make alterations in its nation-wide health insurance coverage to meet requirements imposed by individual states. Testimony. 11. At the beginning of 2016 the Appellant was 33 years old and resided in [name of city or town omitted] in Plymouth County, Massachusetts. Exhibit The Appellant s 2016 tax return was filed as a single person with no dependents and reports $48,227 in federal adjusted gross income (AGI). Exhibit The Appellant s 2016 AGI is more than 300% of the federal poverty level for a one-person household ($35,310). DOR Table Under DOR Table 3, the Appellant could afford to pay $ per month for health insurance in (The calculation is 8.13% multiplied by $48,227 AGI = $3, per year divided by 12 months = $ per month.) 15. Under DOR Table 4 (Region 3), health insurance coverage would have cost the Appellant $256 per month for individual coverage at his age (31-34 age bracket) and location in Massachusetts. Compare Findings of Fact, No. 10, above ($ per month actual Tufts premium). ANALYSIS AND CONCLUSIONS OF LAW The case is before me on the Appellant s appeal from the Department of Revenue s (DOR) assessment of a tax penalty because the Appellant s employer-sponsored health insurance coverage for 2016 did not meet the Massachusetts minimum creditable coverage standards ( MCC ). The issue to be decided is whether the penalty should be waived, either in whole or in part. See Exhibits 1 and 2. Page 5 of 0508-TaxPenaltyAppeal-Docket-Number PA16-2

6 Massachusetts Health Connector Appeals Unit I begin by summarizing the legal rules that underlie this appeal. The tax penalty was enacted by the Massachusetts Legislature to encourage compliance with what is known as the individual mandate under the Massachusetts Health Care Reform Act of The individual mandate requires that all Massachusetts residents, age 18 and older, shall obtain and maintain health insurance coverage, as long as it is deemed affordable under the schedule set by the board of directors for the Commonwealth Health Insurance Connector Authority (Health Connector or Connector). Mass. Gen. Laws c. 111M, sec. 2 (a). 2 Any health insurance policy must also satisfy the Massachusetts minimum credible coverage standards ( MCC ) in order to avoid the penalty. Mass. Gen. Laws c. 111M, sec. 2 (b). See also 956 Code Mass. Regs and If these requirements are not met, a tax penalty is assessed for each of the months that the person did not have health insurance, as required by the individual mandate. Mass. General Laws c. 111M, sec. 2(b). There is, however, a three-month grace period for any lapse in coverage to allow the taxpayer to make the transition between health insurance policies. Connector s Administrative Bulletin 03-10, applying Mass. Gen. Laws c. 111M, sec. 2 (b). See also DOR Instructions, at page HC-3. The Connector s regulations also provide for a hardship appeal from the assessment of a penalty. 956 Code Mass. Regs and The grounds for a hardship appeal are summarized in the Statement of Grounds for Appeal 2015 that the Appellant signed and filed in this case. See Exhibit 2. In this case, the evidence presented on appeal establishes that in 2016 the Appellant was enrolled in an employer-sponsored health plan for which he paid a biweekly premium through payroll deduction and that the health plan did not satisfy the Massachusetts minimum creditable coverage standards ( MCC ) because it did not provide any mental health coverage. See 956 CMR 5.03 (a) 3 Thus, there was a basis in both the underlying facts and in the Health Connector regulations for the 12 month penalty that the DOR assessed against the Appellant for The schedule is reprinted in DOR Tables 3 and 4 referred to in this Decision. 3 Given the narrow ground on which I resolve this 2016 appeal, I have not considered if the summary of benefits fails to meet the MCC standards in any additional way. Likewise, I have not considered if the summary of benefits substantially met the MCC standards under the test set forth in 956 Code Mass. Regs (2 (d). Page 6 of 0508-TaxPenaltyAppeal-Docket-Number PA16-2

7 Massachusetts Health Connector Appeals Unit The gist of the Appellant s argument on appeal is that the monthly difference in the cost of his employer-sponsored health insurance ($108 per month) and the Health Connector coverage ($261 per month) is too great and that he is unable to afford the coverage available through the Health Connector. See Appellant s supporting letter (Exhibit 3) and copies of early 2017 bank statements (Exhibits 4 6). I will not seek to resolve the Appellant s affordability or financial hardship argument in this appeal because it is based on his actual enrollment in a Health Connector insurance plan in early 2017 and his financial condition in early The issue in this appeal is the penalty assessed for 2016, on the heels of the Final Appeal Decision rendered for the penalty assessed for See Exhibits 1, 2 8, and 10. I will approach the penalty assessed for 2016 on a much narrower basis. This appeal concerns a long-term employee (approaching 14 years) of a nationwide business who has routinely enrolled in the health care plan that his Employer offered as a job benefit. For 2015 the DOR assessed a 12 month penalty because the employersponsored health plan did not meet the Massachusetts minimum credible coverage standards. On appeal, the penalty assessment was upheld, although it was reduced to 6 months. See Exhibit 10. My concern is with the timing for the penalty assessed for The Appellant did not learn until he received the IRS Form 1095 in early 2016 that there was a MCC coverage issue with his 2015 health insurance. At that point, it was too late to do anything about his 2015 coverage; it was also too late to choose a different insurer for The Appellant s appeal of the 2015 penalty assessment ultimately affirmed that there was a MCC compliance issue with the employer-sponsored health insurance. However, by the time that the appeal hearing was held (November 1, 2016) and the decision issued (February 24, 2017) the Appellant could not avoid the assessment of another year-long penalty for 2016 on the same ground. The hearing record shows that the Appellant responded to the encounter with the Hearing Officer in the 2015 tax penalty appeal by applying for coverage through the Health Connector that met the MCC coverage requirements. That coverage was not effective until January 2017, however. The reality is that, under the applicable federal regulations, the Appellant could not switch his coverage to a new insurer any earlier than January The regulation specifies that the open enrollment period for 2016 coverage is between November 1, 2015, and January 31, 2016, which predates the Page 7 of 0508-TaxPenaltyAppeal-Docket-Number PA16-2

8 Massachusetts Health Connector Appeals Unit Appellant s notice of the MCC problem. The next open enrollment period for coverage that begins in January starts on November 1, 2016, and ends on January 31, See 45 Code Federal Regulations (e) (2). In other words, the Appellant in this case complied at the earliest date allowed by the federal regulations by shifting his coverage from his Employer s non-compliant coverage to the Health Connector s MCC compliant coverage. He has already been assessed a 6-month reduced penalty for Under the circumstances it would not be fair to assess a second penalty when the federal regulations did not provide an opportunity to come into compliance for In sum, I waive the full penalty assessed for Any question that the Appellant may have about affordability of coverage for 2017 is premature. It can be decided if the DOR assesses a penalty against the Appellant for 2017 and the Appellant files an appeal. See my RECOMMENDATION below. PENALTY ASSESSED Number of Months Appealed: _12 Number of Months Assessed: 0 NOTIFICATION OF YOUR RIGHT TO APPEAL TO COURT If you disagree with this decision, you have the right to appeal to Court in accordance with Chapter 30A of the Massachusetts General Laws. To appeal, you must file a complaint with the Superior Court for the county where you reside, or Suffolk County Superior Court within thirty (30) days of your receipt of this decision. NOTIFICATION OF ASSESSMENT The Connector has notified the Department of Revenue that, pursuant to its decision, you should be assessed a penalty for Tax Year 2016 for the amount equal to one half of the lowest cost health insurance plan available to you for each month you have been assessed the penalty, as listed above, plus applicable interest back to the due date of the return without regard to extension. Page 8 of 0508-TaxPenaltyAppeal-Docket-Number PA16-2

9 Massachusetts Health Connector Appeals Unit If the number of months assessed is zero (0) because your penalty has been overturned, the Connector has notified the Department of Revenue that you should NOT be assessed a penalty for Tax Year Cc: Connector Appeals Unit RECOMMENDATION. It is likely that you would benefit from advice outside the Health Connector to assess your choice between health insurance coverage obtained through your Employer and coverage obtained through the Health Connector (or a third party). I suggest that you contact Heath Care For All, a private, nonprofit organization. You can reach the free consumer hot line at or consult the website at I also suggest that you inform whomever you consult that you have written appeal decisions for both the 2015 and 2016 tax years. Page 9 of 0508-TaxPenaltyAppeal-Docket-Number PA16-2

10 FINAL APPEAL DECISION Appeal Decision: x_ Penalty Overturned in Full Penalty Upheld Penalty Overturned in Part Hearing Issue: Appeal of the 2016 Tax Year Penalty Hearing Date: May 24, 2017 Decision Date: June 9, 2017 AUTHORITY This hearing was conducted pursuant to the Massachusetts General Laws, Chapter 111M, Chapter 176Q, Chapter 30A and 801 CMR 1.02 and the rules and regulations promulgated thereunder. JURISDICTION Any person aggrieved by the assessment or potential assessment of the individual mandate penalty may file an appeal, pursuant to the provisions of Mass. General Laws Chapter 111M, Section 4 and 956 CMR HEARING RECORD The Appellant appeared at the hearing, which was held by telephone on May 24, Appellant provided testimony under oath and all testimony was recorded electronically. The hearing record consists of the Appellant s testimony and the following documents which were admitted into evidence without objection from the Appellant. Exhibit 1: Notice of Hearing dated May 1, Exhibit 2: Appellant s Schedule HC information dated May 1, Exhibit 3: A Statement of Grounds for Appeal. Appellant indicated Deprivation as grounds for appeal. The document was dated February 14, FINDINGS OF FACT The record shows, and I so find: Page 1 of Appeal Number: PA16-31

11 1. Appellant was a 52 year old single individual residing in Berkshire County in (Exhibit 2). 2. According to Appellant s Schedule HC information Appellant was uninsured for 12 months of Appellant is appealing a 12 month penalty. (Exhibit 2). 3. Appellant s 2016 Federal Adjusted Gross Income was $58, Appellant s employer was not required to offer employer sponsored health insurance (Testimony of Appellant). 5. I find that Appellant s testimony that the Appellant could not afford the quoted $500 monthly cost of private insurance to be credible. 6. I find that Appellant s testimony that Appellant bought a house in 2016 and that the Appellant incurred unanticipated expenses because of that action to be credible. ANALYSIS AND CONCLUSIONS OF LAW G.L c. 111M, 2, also called the individual mandate, requires every adult resident of Massachusetts to obtain insurance coverage [s]o long as it is deemed affordable. Residents who do not obtain insurance are subject to a tax penalty. Any person aggrieved by the assessment or potential assessment of the individual mandate penalty may file an appeal, pursuant to the provisions of Mass. General Laws Chapter 111M, Section 4 and 956 CMR Appellant raises affordability as an issue. 956 CMR 6.05 instructs the Connector Board to adopt an affordability schedule annually. 956 CMR 6.05, s. 2 permits the Connector Board to adopt a Premium schedule that establishes the lowest level of Premium that is deemed by the Board to be available for minimum creditable coverage. The 2016 Massachusetts Schedule HC Health Care Instructions and Worksheets establish the affordability schedule and the lowest level of Premium coverage for Table 3, Affordability, shows that a single individual with a Federal Adjusted Gross Income over $47, can afford a premium that is 8.133% as a percentage of income. Appellant s Adjusted Gross Income of $58, divided by 12 months and that amount divided by 8.13% equals $ as the figure that the Appellant can afford to pay for a monthly health insurance premium. Table 4, Premiums, states that the lowest premium level for single individual aged 54 in Berkshire County to be $ monthly which Appellant could afford. This suggests that the Page 2 of Appeal Number: PA16-31

12 Appellant s penalty should be upheld. However, I find that the expenses associated with Appellant s purchase of a house created a special financial hardship for the Appellant. I find that Appellant has presented evidence of a hardship pursuant to 956 CMR 6.08 (1. e). Specifically, Appellant s purchase of health insurance would have caused a serious deprivation of food, clothing, and other necessities. Since the Appellant has presented evidence of a hardship in 2016, Appellant should not be fined for failure to have health insurance for the 12 months in question. I find that the Appellant is not subject to a tax penalty in PENALTY ASSESSED Number of Months Appealed: _12 Number of Months Assessed: 0 If the number of months assessed is zero (0) because your penalty has been overturned, the Connector has notified the Department of Revenue that you should NOT be assessed a penalty for Tax Year NOTIFICATION OF YOUR RIGHT TO APPEAL TO COURT If you disagree with this decision, you have the right to appeal to Court in accordance with Chapter 30A of the Massachusetts General Laws. To appeal, you must file a complaint with the Superior Court for the county where you reside, or Suffolk County Superior Court within thirty (30) days of your receipt of this decision. Cc: Connector Appeals Unit Addendum: Appellant may be subject to a tax penalty in 2017 if Appellant cannot provide evidence of a financial hardship. Page 3 of Appeal Number: PA16-31

13 FINAL APPEAL DECISION Appeal Decision: X_ Penalty Overturned in Full Penalty Overturned in Part Penalty Upheld Hearing Issue: Appeal of the 2016 Tax Year Penalty Hearing Date: Decision Date: May 25, 2017 June 19, 2017 AUTHORITY This hearing was conducted pursuant to the Massachusetts General Laws, Chapter 111M, Chapter 176Q, Chapter 30A and 801 CMR 1.02 and the rules and regulations promulgated thereunder. JURISDICTION Any person aggrieved by the assessment or potential assessment of the individual mandate penalty may file an appeal, pursuant to the provisions of Mass. General Laws Chapter 111M, Section 4 and 956 CMR HEARING RECORD The Appellant appeared at the hearing, which was held by telephone on May 25, 2017 The hearing record consists of the Appellant s testimony and the following documents which were admitted into evidence: Exhibit 1: Exhibit 2: Exhibit 3: Exhibit 4: Notice of Hearing dated May 1, (four pages) Appeal Case Information from form Schedule HC. (one page) Statement of Grounds for Appeal dated March 1, (five pages) Written Statement of Appeal. Page 1 of Appeal Number: PA16-35

14 FINDINGS OF FACT The record shows, and I so find: 1. The Appellant is 27 years old and is single. Appellant lives in California. 2. Appellant is employed in retail car sales. Appellant had no income during the last three months of Appellant does not have health insurance in The Appellant submitted a written Statement of Appeal dated March 1, 2017, stating no grounds for Appeal but should have submitted under Other. During 2016 other circumstances, such as applying the affordability tables in Schedule HC to you is inequitable. However, Appellant should have also stated During 2016, the expense of purchasing health insurance would have caused a serious deprivation of food, shelter, clothing or other necessities. I deem his appeal to be heard under both grounds. 5. The Appellant s monthly expenses totaled $2,564.00, consisting of rent $1,000.00, cell phone $78.00, car payment $386.00, car insurance $85.00, car gas $300.00, food $250.00, credit card $75.00, clothing $ entertainment $100.00, toiletries $75.00, cat $20.00, dental insurance $ I take administrative notice of the information set forth in tables 1 through 6 in the Department of Revenue Schedule HC Health Care Instructions and Worksheets (Schedule HC Instructions). Tables 3 & 4 incorporate the affordability schedules adopted by the board of directors of the Commonwealth Health Insurance Connector Authority for Table 1 sets forth the income eligibility standards for various family sizes at 150% of the federal poverty level and Table 2 sets forth the income eligibility standards for various family sizes at 300 per cent of the federal poverty level, which is the income eligibility standard for the government-subsidized health insurance program. See Mass. G.L. c. 118H, s.3(a)(1). Tables 5 and 6 set forth the tax penalties for Based on the appellant s federal adjusted gross income and the above referenced tables, I find the appellant may have been eligible for subsidized health insurance, since Appellants income of $34, was less than $35, The monthly premium for health insurance available on the private market in Essex County for a 26 year old single person with zero dependents was $ The tables reflect that Appellant could afford $ This is minimally more than what the appellant is deemed to afford. (Tables 2, 3 & 4 of the Schedule HC Instructions) Page 2 of Appeal Number: PA16-35

15 ANALYSIS AND CONCLUSIONS OF LAW G.L c. 111M, 2, also called the individual mandate, requires every adult resident of Massachusetts to obtain insurance coverage [s]o long as it is deemed affordable. Residents who do not obtain insurance are subject to a tax penalty. The Appellant submitted a written Statement of Appeal dated March 1, 2017, stating no grounds for Appeal but should have submitted under Other. During 2016 other circumstances, such as applying the affordability tables in Schedule HC to you is inequitable. However, Appellant should have also stated During 2016, the expense of purchasing health insurance would have caused a serious deprivation of food, shelter, clothing or other necessities. I deem his appeal to be heard under both grounds. The Health Care Reform Act of 2006 requires every adult resident of Massachusetts to obtain and maintain creditable insurance coverage so long as it is deemed affordable under the schedule established by the board of the Connector. Mass. Gen. Laws ch. 111M, 2(a). Massachusetts residents who fail to indicate on their state tax returns that they obtained the mandated creditable coverage are subject to a tax penalty for each month in which that the individual did not have creditable health insurance. Id. at 2(b). However, individuals with incomes up to 150 percent of the Federal Poverty Level ( FPL ) are not subject to any penalty for non-compliance with the individual mandate. See Massachusetts Department of Revenue Technical Information Release ( TIR ) 13-1, available at help-and-resources/legal-library/tirs/tirs-by-years/2013-releases/tir-13-1.html. For 2016, 150 percent of the FPL was $17, for a single person with zero dependents. Id. In addition, a lapse in coverage of 63 days or less is not subject to the section 2(b) penalty. See Administrative Bulletin (Dec. 7, 2010), available at mahealthconnector.org/portal/binary/com.epicentric.contentmanagement.servl et.contentdeliveryservlet/health%2520care%2520reform/regulations/docume nts/administrative%20information%20bulletin% pdf; see also 830 Mass. Code Regs. 111M.2.1(5)(c) (2008). Thus, no penalty is imposed for lapses in coverage consisting of three or fewer consecutive calendar months. Id. Since Appellant s 2016 income was more than 150 percent of the FPL, making him potentially subject to an individual mandate penalty, the threshold issue to be addressed is whether creditable health insurance coverage was affordable to Page 3 of Appeal Number: PA16-35

16 him in In determining affordability, consideration is given first to the amount Appellant is deemed able to afford for health insurance premiums under the Affordability Schedule and second to the cost of health insurance that was available through employer-sponsored plans, government-subsidized programs or on the private insurance market. See 2016 Schedule HC Instructions and Worksheets, supra. Appellant reported a federal AGI of $34, in 2016, and Appellant s filing status was single with no dependents. EX 2. According to the Affordability Schedule established by the Connector s board and included in the Instructions and Worksheets of the 2016 Massachusetts Schedule HC, Appellant could afford to pay $ monthly for health insurance. See 2016 Schedule HC Instructions and Worksheets, supra at Table 3. Private insurance would have been available to him from the Premium Tables, at a cost of $ monthly for coverage with zero dependents which Appellant stated he could not afford. Id. at Table 4. Appellants are subject to the tax penalty unless appellants demonstrate a hardship. 956 Mass. Code Regs. 6.07(1) (2008). To prevail on a hardship appeal, an appellant must establish that based on all his circumstances, minimum creditable coverage was not affordable to him[er] because [s]he experienced a hardship. Id. at 6.08(1). Appellant is deemed to afford $ for health insurance coverage because of his income. Private insurance in the market place was $ per month. In addition, Appellant stated he had no income for the last three months of On these facts, I find that Appellant has shown that he was partially precluded from purchasing affordable health insurance during Mass. Code Regs. 6.08(3) (2008). Accordingly, I conclude that he is partially exempt from a tax penalty for his non-compliance with the individual mandate. Accordingly, Appellant s appeal is UPHELD in Part, and the 2016 penalty assessed is OVERTURNED in Part. PENALTY ASSESSED Number of Months Appealed: 12 Number of Months Assessed: 6 The Connector has notified the Department of Revenue that, pursuant to its decision, you should be assessed a penalty for Tax Year 2016 for the amount equal to one half of the lowest cost health insurance plan available to you for each month you have Page 4 of Appeal Number: PA16-35

17 been assessed the penalty, as listed above, plus applicable interest back to the due date of the return without regard to extension. If the number of months assessed is zero (0) because your penalty has been overturned, the Connector has notified the Department of Revenue that you should NOT be assessed a penalty for Tax Year NOTIFICATION OF YOUR RIGHT TO APPEAL TO COURT If you disagree with this decision, you have the right to appeal to Court in accordance with Chapter 30A of the Massachusetts General Laws. To appeal, you must file a complaint with the Superior Court for the county where you reside, or Suffolk County Superior Court within thirty (30) days of your receipt of this decision. Cc: Connector Appeals Unit Page 5 of Appeal Number: PA16-35

18 FINAL APPEAL DECISION Appeal Decision: X_ Penalty Overturned in Full Penalty Overturned in Part Penalty Upheld Hearing Issue: Appeal of the 2016 Tax Year Penalty Hearing Date: Decision Date: June 5, 2017 June 18, 2017 AUTHORITY This hearing was conducted pursuant to the Massachusetts General Laws, Chapter 111M, Chapter 176Q, Chapter 30A and 801 CMR 1.02 and the rules and regulations promulgated thereunder. JURISDICTION Any person aggrieved by the assessment or potential assessment of the individual mandate penalty may file an appeal, pursuant to the provisions of Mass. General Laws Chapter 111M, Section 4 and 956 CMR HEARING RECORD The Appellants appeared at the hearing, which was held by telephone on June 5, 2017 The hearing record consists of the Appellants testimony and the following documents which were admitted into evidence: Exhibit 1: Notice of Hearing dated May 10, 2017 Exhibit 2: Exhibit 3: Exhibit 4: Appeal Case Information from form Schedule HC Statement of Grounds for Appeal-2016 undated Written Statement of Appeal undated with documents Exhibit 5: Prior Appeal 2014 Page 1 of Appeal Number: PA16-42

19 FINDINGS OF FACT The record shows, and I so find: 1. The Appellant is 29 years old and is Married. Appellant s husband is 29 years old. Appellants live in Bristol County. 2. Appellant is employed in food retail sales. She works part time and her employer did not offer health insurance. Appellant s husband is employed in retail sales. Appellants were married in October Husband s employer did offer health insurance at $ per month, for him alone, which he could not afford. 3. Appellants do not have health insurance in 2017, as of the date of the hearing but have signed up for health insurance and are waiting for the coverage to start. 4. Appellant worked part time. Exhibit four showed as of 11/1516, she had nly earned $13, It was very likely she would not have earned 150% of the Federal Poverty Level by the end of The Appellant s monthly expenses totaled $1,975.00, consisting of rent $675.00, electricity $125.00, internet and cable $89.00, 2 cell phones $206.00, transportation $80.00, food $400.00, clothing $75.00, entertainment $100.00, toiletries $100.00, credit card $ The Appellants submitted a Statement of Grounds for Appeal-2016 undated, stating as grounds for appeal During 2016, the expense of purchasing health insurance would have caused a serious deprivation of food, shelter, clothing or other necessities. 7. I take administrative notice of the information set forth in tables 1 through 6 in the Department of Revenue Schedule HC Health Care Instructions and Worksheets (Schedule HC Instructions). Tables 3 & 4 incorporate the affordability schedules adopted by the board of directors of the Commonwealth Health Insurance Connector Authority for Table 1 sets forth the income eligibility standards for various family sizes at 150% of the federal poverty level and Table 2 sets forth the income eligibility standards for various family sizes at 300 per cent of the federal poverty level, which is the income eligibility standard for the government-subsidized health insurance program. See Mass. G.L. c. 118H, s.3(a)(1). Tables 5 and 6 set forth the tax penalties for Page 2 of Appeal Number: PA16-42

20 8. Based on the appellant s federal adjusted gross income and the above referenced tables, I find the appellant would not have been eligible for subsidized health insurance, since Appellants income of $51, was more than $47, The monthly premium for health insurance available on the private market in Bristol County for a 28 year old married couple was $ The tables reflect that Appellants could afford $ This is less than what the appellants are deemed to afford. (Tables 2, 3 & 4 of the Schedule HC Instructions) ANALYSIS AND CONCLUSIONS OF LAW G.L c. 111M, 2, also called the individual mandate, requires every adult resident of Massachusetts to obtain insurance coverage [s]o long as it is deemed affordable. Residents who do not obtain insurance are subject to a tax penalty. The Appellants submitted a Statement of Grounds for Appeal-2016 undated, stating as grounds for appeal During 2016, the expense of purchasing health insurance would have caused a serious deprivation of food, shelter, clothing or other necessities. The Health Care Reform Act of 2006 requires every adult resident of Massachusetts to obtain and maintain creditable insurance coverage so long as it is deemed affordable under the schedule established by the board of the Connector. Mass. Gen. Laws ch. 111M, 2(a). Massachusetts residents who fail to indicate on their state tax returns that they obtained the mandated creditable coverage are subject to a tax penalty for each month in which that the individual did not have creditable health insurance. Id. at 2(b). However, individuals with incomes up to 150 percent of the Federal Poverty Level ( FPL ) are not subject to any penalty for non-compliance with the individual mandate. See Massachusetts Department of Revenue Technical Information Release ( TIR ) 13-1, available at help-and-resources/legal-library/tirs/tirs-by-years/2013-releases/tir-13-1.html. For 2015, 150 percent of the FPL was $23, for a married couplet. Id. In addition, a lapse in coverage of 63 days or less is not subject to the section 2(b) penalty. See Administrative Bulletin (Dec. 7, 2010), available at mahealthconnector.org/portal/binary/com.epicentric.contentmanagement.servl et.contentdeliveryservlet/health%2520care%2520reform/regulations/docume nts/administrative%20information%20bulletin% pdf; see also 830 Page 3 of Appeal Number: PA16-42

21 Mass. Code Regs. 111M.2.1(5)(c) (2008). Thus, no penalty is imposed for lapses in coverage consisting of three or fewer consecutive calendar months. Id. Since Appellants 2015 income was more than 150 percent of the FPL, making her potentially subject to an individual mandate penalty, the threshold issue to be addressed is whether creditable health insurance coverage was affordable to them in In determining affordability, consideration is given first to the amount Appellant is deemed able to afford for health insurance premiums under the Affordability Schedule and second to the cost of health insurance that was available through employer-sponsored plans, government-subsidized programs or on the private insurance market. See 2014 Schedule HC Instructions and Worksheets, supra. Appellants reported a federal AGI of $51, in 2016, and Appellant s filing status was married with one dependent. EX 2. According to the Affordability Schedule established by the Connector s board and included in the Instructions and Worksheets of the 2016 Massachusetts Schedule HC, Appellants could afford to pay $ monthly for health insurance. See 2014 Schedule HC Instructions and Worksheets, supra at Table 3. Private insurance would have been available to them from the Premium Tables, at a cost of $ monthly for coverage and her employer did not offered health insurance to part time employees. Husband s employer offered health insurance for single coverage at a rate of $ per month, which appellants could not afford. Id. at Table 4. Appellants are subject to the tax penalty unless appellants demonstrate a hardship. 956 Mass. Code Regs. 6.07(1) (2008). To prevail on a hardship appeal, an appellant must establish that based on all his circumstances, minimum creditable coverage was not affordable to him[er] because [s]he experienced a hardship. Id. at 6.08(1). On these facts, I find that Appellants have shown that they were precluded from purchasing affordable health insurance during Mass. Code Regs. 6.08(3) (2008). Accordingly, I conclude that they are exempt from a tax penalty for their non-compliance with the individual mandate. Accordingly, Appellant s appeal is ALLOWED, and the 2016 penalty assessed is OVERTURNED. PENALTY ASSESSED Number of Months Appealed: 24 Number of Months Assessed: 0 Page 4 of Appeal Number: PA16-42

22 The Connector has notified the Department of Revenue that, pursuant to its decision, you should be assessed a penalty for Tax Year 2011 for the amount equal to one half of the lowest cost health insurance plan available to you for each month you have been assessed the penalty, as listed above, plus applicable interest back to the due date of the return without regard to extension. If the number of months assessed is zero (0) because your penalty has been overturned, the Connector has notified the Department of Revenue that you should NOT be assessed a penalty for Tax Year NOTIFICATION OF YOUR RIGHT TO APPEAL TO COURT If you disagree with this decision, you have the right to appeal to Court in accordance with Chapter 30A of the Massachusetts General Laws. To appeal, you must file a complaint with the Superior Court for the county where you reside, or Suffolk County Superior Court within thirty (30) days of your receipt of this decision. Cc: Connector Appeals Unit Page 5 of Appeal Number: PA16-42

23 FINAL APPEAL DECISION Appeal Decision: _X_ Penalty Overturned in Full Penalty Overturned in Part Penalty Upheld Hearing Issue: Appeal of the 2016 Tax Year Penalty Hearing Date: June 6, 2017 Decision Date: June 19, 2017 AUTHORITY This hearing was conducted pursuant to the Massachusetts General Laws, Chapter 111M, Chapter 176Q, Chapter 30A and 801 CMR 1.02 and the rules and regulations promulgated thereunder. JURISDICTION Any person aggrieved by the assessment or potential assessment of the individual mandate penalty may file an appeal, pursuant to the provisions of Mass. General Laws Chapter 111M, Section 4 and 956 CMR HEARING RECORD The Appellant appeared at the hearing, which was held by telephone on June 6, The hearing record consists of the Appellant s testimony and the following documents which were admitted into evidence, without objection by Appellant: Exhibit 1: Exhibit 2: Exhibit 3: Notice of Hearing ( ) (3 pages). Information from Schedule HC (1 page). Statement of Grounds for Appeal (with letter) (3-7-17) (6 pages). FINDINGS OF FACT The record shows, and I so find: 1. Appellant, age 27 during 2016, from Essex County, filed single on the tax return. Page 1 of Appeal Number: PA1647

24 2. The federal AGI was $27, Appellant had health insurance through his employer for the months of July through December Appellant was employed on a part-time basis from January through April He obtained a full-time position in April 2016, and qualified for health insurance through his employer as of July Appellant s expenses for food, shelter, clothing, transportation and student loans used all of his income for the months he did not have health insurance. 5. Appellant could not afford health insurance based upon the tables in Schedule HC. ANALYSIS AND CONCLUSIONS OF LAW G.L c. 111M, 2, also called the individual mandate, requires every adult resident of Massachusetts to obtain insurance coverage [s]o long as it is deemed affordable. Residents who do not obtain insurance are subject to a tax penalty. Appellant submitted a statement of grounds for this appeal, claiming that the individual mandate penalty did not apply to him because he was underemployed for the first several months of 2016, and could not afford health insurance. Appellant was uninsured for only part of the year. Appellant did not have insurance in the months of July to December, a total of 6 months. According to M.G.L. c. 111M, s. 2, residents are permitted a 63-day gap between periods of coverage without facing a penalty ; for Tax Year 2011, Administrative Bulletin 03-10: Guidance Regarding M.G.L. c. 111M and M.G.L. c. 176Q, as implemented by 956 CMR 6.00, interprets the 63-day gap in coverage to be three months. As a result, gaps of three months are not subject to penalty. Thus, the appellant is appealing the penalty of 3 months. For the months that Appellant did not have health insurance, paying for health insurance would have caused a serious deprivation of food, shelter, clothing and transportation, after paying also for student loans. PENALTY ASSESSED Number of Months Appealed: 3 Number of Months Assessed: 0 The Connector has notified the Department of Revenue that, pursuant to its decision, you should be assessed a penalty for Tax Year 2016 for the amount equal to one half of the lowest cost health insurance plan available to you for each month you have been assessed the penalty, as listed above, plus applicable interest back to the due date of the return without regard to extension. Page 2 of Appeal Number: PA1647

25 If the number of months assessed is zero (0) because your penalty has been overturned, the Connector has notified the Department of Revenue that you should NOT be assessed a penalty for Tax Year NOTIFICATION OF YOUR RIGHT TO APPEAL TO COURT If you disagree with this decision, you have the right to appeal to Court in accordance with Chapter 30A of the Massachusetts General Laws. To appeal, you must file a complaint with the Superior Court for the county where you reside, or Suffolk County Superior Court within thirty (30) days of your receipt of this decision. Cc: Connector Appeals Unit Page 3 of Appeal Number: PA1647

26 FINAL APPEAL DECISION Appeal Decision: _X_ Penalty Overturned in Full Penalty Overturned in Part Penalty Upheld Hearing Issue: Appeal of the 2016 Tax Year Penalty Hearing Date: June 6, 2017 Decision Date: June 19, 2017 AUTHORITY This hearing was conducted pursuant to the Massachusetts General Laws, Chapter 111M, Chapter 176Q, Chapter 30A and 801 CMR 1.02 and the rules and regulations promulgated thereunder. JURISDICTION Any person aggrieved by the assessment or potential assessment of the individual mandate penalty may file an appeal, pursuant to the provisions of Mass. General Laws Chapter 111M, Section 4 and 956 CMR HEARING RECORD The Appellant appeared at the hearing, which was held by telephone on June 6, The hearing record consists of the Appellant s testimony and the following documents which were admitted into evidence, without objection by Appellant: Exhibit 1: Exhibit 2: Exhibit 3: Notice of Hearing ( ) (3 pages). Information from Schedule HC (1 page). Statement of Grounds for Appeal (with documents) (3-3-17) (10 pages). FINDINGS OF FACT The record shows, and I so find: 1. Appellant, age 28 during 2016, from Suffolk County, filed single on the tax return. Page 1 of Appeal Number: PA1650

27 2. The federal AGI was $35, Appellant had health insurance for the month of December Appellant had health insurance available to him through his employer, but he did not believe he could afford it. The cost through the employer would have been $63 per week, or $270 per month. Based upon the tables in Schedule HC, Appellant could not afford the insurance. 4. Appellant had child support payments that also used a portion of his income. 5. Appellant s expenses for food, shelter, clothing, transportation, and child support used most of his income. 6. Appellant obtained health insurance through the Health Connector as of December 2016 when his hours were cut for his employment. ANALYSIS AND CONCLUSIONS OF LAW G.L c. 111M, 2, also called the individual mandate, requires every adult resident of Massachusetts to obtain insurance coverage [s]o long as it is deemed affordable. Residents who do not obtain insurance are subject to a tax penalty. Appellant submitted a statement of grounds for this appeal, claiming that the individual mandate penalty did not apply to him because the cost of health insurance would have caused a serious deprivation of food, shelter, clothing and transportation. Appellant was uninsured for most of the year. Appellant did have insurance in the month of December. According to M.G.L. c. 111M, s. 2, residents are permitted a 63-day gap between periods of coverage without facing a penalty ; for Tax Year 2011, Administrative Bulletin 03-10: Guidance Regarding M.G.L. c. 111M and M.G.L. c. 176Q, as implemented by 956 CMR 6.00, interprets the 63-day gap in coverage to be three months. As a result, the appellant would be appealing the penalty of 8 months. Paying for health insurance would have caused a serious deprivation of food, shelter, clothing and transportation. PENALTY ASSESSED Number of Months Appealed: 8 Number of Months Assessed: 0 The Connector has notified the Department of Revenue that, pursuant to its decision, you should be assessed a penalty for Tax Year 2016 for the amount equal to one half of the lowest cost health insurance plan available to you for each month you have been assessed the penalty, as listed above, plus applicable interest back to the due date of the return without regard to extension. Page 2 of Appeal Number: PA1650

28 If the number of months assessed is zero (0) because your penalty has been overturned, the Connector has notified the Department of Revenue that you should NOT be assessed a penalty for Tax Year NOTIFICATION OF YOUR RIGHT TO APPEAL TO COURT If you disagree with this decision, you have the right to appeal to Court in accordance with Chapter 30A of the Massachusetts General Laws. To appeal, you must file a complaint with the Superior Court for the county where you reside, or Suffolk County Superior Court within thirty (30) days of your receipt of this decision. Cc: Connector Appeals Unit Page 3 of Appeal Number: PA1650