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Schedule HC and health care penalties

Massachusetts typically requires any qualifying resident (or part-year resident) over 18 years to be enrolled in a health insurance plan that meets Minimum Creditable Coverage (MCC) requirements. You'll need to report health insurance information and the period of enrollment on Schedule HC, regardless of the type of insurance, to avoid health care penalties on the individual income tax return.
Enter MCC health insurance information on the
MAHC
 screen in the
General
 folder. Private or employer-sponsored insurance plans need to include the name of the insurance company and the subscriber's number on Schedule HC. Enter information related to a failure to maintain MCC health insurance on the
MAHC-2
 screen.

Penalties

Taxpayers who don't provide sufficient health care information or a valid reason on Schedule HC for failing to enroll in MCC health insurance are subject to penalties. The health care penalty is based on the taxpayer's income level (compared with the federal poverty level for family size) and the number of months (subject to certain provisions) the taxpayer failed to carry MCC health insurance during the mandate period. UltraTax CS calculates the Massachusetts Health Care Penalty Calculation Worksheet for taxpayers who are subject to the penalty but don't provide sufficient reason for lapses in MCC insurance.
important
Typically, taxpayers are subject to a penalty for each month they didn't carry MCC insurance. Taxpayers who carried MCC insurance for some (but not all) of the year receive a 3-month penalty exemption for the year during which MCC insurance lapsed. Taxpayers over age 18 who maintained residency in Massachusetts during the tax year are assumed to be subject to the health care mandate for all 12 months of the calendar year except for the following special circumstances.
Taxpayer turned 18 during the year
  • Massachusetts excludes all months preceding the month of the taxpayer's 18th birthday from the mandate period.
  • Massachusetts excludes the month of the taxpayer's birthday plus the 2 months immediately following.
  • A taxpayer who turned 18 during October, November, or December isn't subject to the mandate but still needs to complete the date of birth and family size on Schedule HC, Line 1.
Taxpayer established residency during the year
  • Massachusetts automatically excludes January, February, and March from the mandate period for all part-year residents.
  • Massachusetts excludes the month the taxpayer established Massachusetts residency plus the 2 months immediately following.
  • A taxpayer who didn't establish Massachusetts residency until October, November, or December isn't subject to the mandate and isn't required to file Schedule HC.
Taxpayer died during the year
  • If the taxpayer died before the last day of the month, Massachusetts excludes the month of death from the mandate period.
  • If the taxpayer died on the last day of the month, Massachusetts includes the month of death in the mandate period (unless other special circumstances apply).
  • The months following the month of death are excluded from the mandate period.
  • You aren't required to file Schedule HC on behalf of a taxpayer who died on or before January 30.
Taxpayer relinquished residency during the year
  • Massachusetts automatically excludes January, February, and March from the mandate period for all part-year residents (including those who were residents as of December 31 of the previous year).
  • If a taxpayer moved out of MA on the last day of the month, Massachusetts includes the month they relinquished residency in the mandate period (unless other special circumstances apply).
  • The months following the month the taxpayer relinquished residency are excluded from the mandate period.
  • A taxpayer who relinquished residency on or before April 29 isn't required to file Schedule HC.
note
UltraTax CS automatically determines the mandate period for these special circumstances based on the date of birth, date of death, and residency dates you enter.

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