ObamaCare and It’s Impact On Taxes
It has been nearly five years since the controversial Patient Protection and Affordable Care Act, or as it is more commonly known, “ObamaCare,” was signed into law by President Obama after narrowly passing the House and Senate. Yet it is only now that we are beginning to feel the tax effects on businesses and individuals as the 2015 tax return filing season heats up. This article touches on just a few of those items that have a more immediate impact.
Beginning on January 1, 2014, the individual mandate became effective, requiring individuals to have minimum essential health insurance coverage. Individuals must have this coverage unless they qualify for a health coverage exemption. If individuals do not have minimum essential coverage, or qualify for a health coverage exemption, they must make a “shared responsibility payment” when they file their 2014 tax returns. Individuals will also need to report whether or not they have minimum essential coverage when they file their 2014 tax return. If coverage was effective for the entire year, you will simply check a box on the tax return indicating as much.
Some individuals may qualify for what is called a Premium Tax Credit. This is only available to those individuals who obtain coverage through the Health Insurance Marketplace. If you are eligible for this credit and if advance credit payments were sent to your insurer on your behalf, you must claim the credit on your 2014 federal tax return. This is true even if other facts and circumstances preclude from having to file a federal tax return. Form 8962, Premium Tax Credit, must be filed in order for you to claim the credit and to reconcile any advance credit payment made on your behalf. If the amount reconciled on form 8962 is lower than the payment sent to your insurer, you will be responsible for paying the difference with your tax return. There are also penalties associated with having received excess payments, but the Internal Revenue Service may waive these penalties in the first year.
For more detailed information on the tax impact of the Affordable Care Act, as well additional information on the timing of various aspects of implementation, such as the employer mandate, please contact Simons Bitzer & Associates’ office at 317-782-3070.
Source: http://www.irs.gov/Affordable-Care-Act/Individuals-and-Families
By: David Winters CPA, Tax Manager at Simons Bitzer & Associates