Yes, it's possible that you get a much better refund by filing the 1040A and using the standard deduction.
We can't comment on the particulars of your case, but this is how things are calculated:
- Itemized deductions only subtract from your taxable income. If your tax bracket is 15% and you file jointly with $20,000 in itemized deductions, you would get a reduction in tax of $1,080. ($20,000 - $12,600 times 15%.)
- Refund of the money you paid for insurance reduces your tax dollar for dollar. You get the whole $5,500 back. And you still get the $12,600 standard deduction.
