Tax News: Affordable Care Act
While the Affordable Care Act, or “ACA,” makes obtaining health care coverage accessible for many Americans, the law imposes additional obligations on many taxpayers who benefit from its provisions.
As of July 1, 2014 most taxpayers are required to report qualified health care coverage on their federal income tax returns pursuant to the ACA. Certain taxpayers are exempt from having minimal essential coverage for the entire tax year, and claim or report the exemption on an attachment to their tax returns. Most taxpayers who are not covered by an employer health insurance, Medicare or Medicaid must purchase their own coverage from a private insurance provider or through the Health Insurance Marketplace established by the ACA. The Health Insurance Marketplace created by the ACA is a resource for uninsured taxpayers to obtain information about insurance options and purchase health care insurance. Taxpayers will either be directed to a state-based marketplace or the federally-facilitated marketplace depending on where they live. Where a taxpayer is not exempt and was uncovered during any part of the year, that taxpayer must pay a penalty known as the “Individual Shared Responsibility Payment” along with his or her income tax return for that tax year.
The ACA also impact employers by requiring the provision of health care coverage based on the size and structure of an organization. Businesses with fewer than 50 full-time employees are not required to offer health care coverage and as such are not subject to the ACA reporting and penalty rules. Businesses with more than 50 employees are required to either offer health care coverage or pay the IRS Employer Shared Responsibility payments. Beginning with the 2015 tax year all employers offering coverage, regardless of size, must file an annual information return reporting information for covered employees.
Complete and accurate reporting of coverage, exemptions, and related credits is complicated. Contact Hone Maxwell LLP for reporting assistance related to your ACA tax obligations.