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William Byrnes (Texas A&M) tax & compliance articles

Posts Tagged ‘Health Care Marketplace’

Today is the deadline to sign up for health care (or face penalties)

Posted by William Byrnes on March 31, 2014


In Health Care Tax Tip 2014-11 the IRS reminds taxpayers that today, March 31, is the deadline to sign up for health care for 2014 – or face penalties.

Below are five tips about the Obama Care (ACA) health care law that the IRS wants taxpayers to consider.

• Currently Insured – No Change: If a taxpayer is already insured, do not need to do anything more than continue that insurance.

• Uninsured – Enroll by Today – March 31: The open enrollment period to purchase health care coverage through the Health Insurance Marketplace for 2014 runs through March 31, 2014. When a taxpayer chooses health insurance through the marketplace, the taxpayer may be able to receive advance payments of the premium tax credit that will immediately help lower the monthly premium.

• Premium Tax Credit To Lower the Monthly Premium: If a taxpayer chooses insurance through the Marketplace, the taxpayer may be eligible to claim the premium tax credit. The taxpayer may elect to have advance payments of the tax credit sent directly to the insurance company during 2014 so that the monthly premium the taxpayer must pay is lower, or the taxpayer can wait to claim the credit when filing the tax return in 2015.  If a taxpayer chooses to have advance payments sent to the insurance company, then the taxpayer must reconcile the payments on the 2014 tax return, which will be filed in 2015.

• Change in Circumstances: If a taxpayer receives advance payments of the premium tax credit to help pay for the insurance coverage, then the taxpayer must report “life changes”, such as income, marital status or family size changes, to the Marketplace. Reporting changes will help to make sure the taxpayer has the right coverage and is getting the proper amount of advance payments of the premium tax credit.

• Individual Shared Responsibility Payment: Starting January 2014, taxpayers and the family must have health care coverage or have an exemption from coverage.  Most people already have qualifying health care coverage.  These individuals will not need to do anything more than maintain that coverage throughout 2014.  If a taxpayer can afford coverage but decides not to buy it and remain uninsured throughout the year, that taxpayer may have to make an “individual shared responsibility payment” (a.k.a. the ACA penalty) when filing a 2014 tax return in 2015.

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IRS Reminds Individuals of Health Care Choices for 2014

Posted by William Byrnes on March 28, 2014


In Issue Number HC-TT- 2014-01, the IRS released reminders for Individuals about the 2014 Health Care Choices.  In 3 days, on March 31, the Heath Care Market Exchange enrollment period will close.

Starting in 2014, each person must choose to either have basic health insurance coverage (known as minimum essential coverage) for everyone in the family for each month or go without health care coverage for some or all of the year.

If a person don’t maintain health insurance coverage, then that person will need to either seek an exemption or pay a penalty (called an “individual shared responsibility payment”) with the 2014 income tax return filed in 2015. 

What Qualifies as Health Insurance to Avoid the Penalty?

Qualifying coverage includes:

  • health insurance coverage provided by your employer (including COBRA and retiree coverage),
  • health insurance coverage purchase through a health care exchange Marketplace,
  • Medicare, Medicaid or other government-sponsored health coverage including programs for veterans, or
  • coverage you buy directly from an insurance company.

Qualifying coverage does not include certain coverage that may provide limited benefits, such as coverage only for vision care or dental care, workers’ compensation, or coverage only for a specific disease or condition. 

Premium Tax Credit May Help Pay for Health Insurance

If purchasing health insurance coverage through the Marketplace, the person may be eligible for financial assistance including the premium tax credit, which will help lower the out-of-pocket cost of your monthly insurance premiums (see yesterday’s blog article).

Exemptions

If a person chooses to go without coverage or experiences a gap in coverage, the person may still qualify for an exemption based upon (1) not having access to affordable coverage, (2) the gap is less than three consecutive months without coverage, or (3) qualifying for one of several other exemptions.  A special hardship exemption applies to individuals who purchase their insurance through the Marketplace during the initial enrollment period but due to the enrollment process have a coverage gap at the beginning of 2014.

Penalty for Not Having Health Insurance

If a person (or any of dependents) do not maintain coverage and do not qualify for an exemption, then the person will owe a penalty, called a “individual shared responsibility payment”, paid when filing the tax return in 2015.  In general, the payment amount is either a percentage of household income or a flat dollar amount, whichever is greater.

The person will owe 1/12th of the annual payment for each month you (or your dependents) do not have coverage and are not exempt. The annual payment amount for 2014 is the greater of:

  • 1 percent of household income that is above the tax return filing threshold for the filing status, such as Married Filing Jointly or single, or
  • A family’s flat dollar amount, which is $95 per adult and $47.50 per child, limited to a maximum of $285.

The penalty is capped at the cost of the national average premium for the bronze level health plan available through the Marketplace in 2014.

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