Punished twice: Immigrants denied health coverage, penalized anyway

Tax Day is almost here. This year, thanks to special enrollment periods announced for the states that use the healthcare.gov platform and many state-based health insurance marketplaces, tax season comes with an opportunity for more people who haven’t yet gotten health coverage under the Affordable Care Act (ACA) to sign up for coverage for 2015.


But unfortunately, for many immigrants these special enrollment periods are no more than a frustrating reminder of how they have been systematically left out of the ACA’s promise of quality, affordable health care for everyone.

{mosads}This is because millions of immigrants have been explicitly barred from purchasing health coverage in the ACA’s insurance marketplaces. Those excluded are the more than 600,000 young immigrants who have qualified for the Deferred Action for Childhood Arrivals (DACA) program initiated in 2012, the over 5 million mothers, fathers, and young immigrants ready to apply for the Obama Administration’s recent executive actions removing the threat of deportation (which Texas and 25 other states have blocked temporarily), and others whose dreams of a better future rest on Congress enacting long-term solutions through comprehensive immigration reform.

Now, on top of that nagging reminder that they’re being shut out from affordable health coverage for political reasons, DACA-qualified immigrants and other immigrants who can’t get ACA coverage are getting hit with a double whammy: even though by law they’re exempt from the penalty for not having coverage, they may still end up paying for it.


That ironic twist comes from a mix of confusion with the exemption rules, lack of early guidance, and appropriate training for tax professionals on who qualifies for an exemption. To make matters worse, unscrupulous tax preparers are exploiting the confusion to take advantage of immigrants and pocket bogus fees.



There are reports from Virginia to California of immigrants who were barred from purchasing coverage through the ACA still getting penalized when they went to file their taxes, including some tax preparers asking clients to make the payment for the penalty directly to them instead of to the U.S. Treasury – a sure sign of preparer fraud.

Young DACA-qualified immigrants may be particularly vulnerable because they have a social security number and even well-intentioned tax preparers may assume they were eligible for coverage and owe the fee if they did not enroll.



The rules are clear: those with DACA cannot purchase coverage in the ACA marketplaces. While we disagree with this restrictive policy, and firmly believe this barrier to affordable health coverage should be removed, in the meantime we need to ensure that immigrants who have been excluded from the opportunity to sign up for affordable coverage don’t get unfairly penalized for not having it.



The IRS has begun to do its part, releasing a consumer alert warning about possible scams, clarifying that DACA recipients are eligible for an exemption and flagging that other immigrants with a social security number may be exempt, too. This alert is an important positive step. But more needs to be done.

The IRS and the Department of Health and Human Services (HHS) must do more to inform those with DACA about their eligibility for an exemption from the non-coverage penalty. After all, it was HHS that established the arbitrary DACA exclusion in the first place.

While recent guidance from the IRS has been helpful, for many DACA youth these notices came too late. For those who have already been incorrectly charged the tax penalty, the IRS should conduct additional outreach to notify them of the steps they can take to recover the fee.

The IRS can also do more to alleviate fears many immigrants have about disclosing their immigration status in tax forms. Many immigrants worry that claiming the ACA tax exemption in their tax returns may lead to immigration enforcement efforts. To address these fears – and to encourage all workers to file their taxes – the IRS should remind immigrants that any information provided in tax filings will not be shared with other agencies, including the Department of Homeland Security.

We need to take these steps – and quickly – to make sure people who’ve seen the chance to get affordable health coverage taken off the table don’t also get taken for a ride when they go to pay their taxes.

Hincapié is executive director of the National Immigration Law Center. Hall is executive director of the Alliance for a Just Society.