Tax year 2014 represents the first year that two critical components of the Affordable Care Act (ACA, also known as “Obamacare”) will begin to impact individual taxpayers:

  • Shared Responsibility Penalty for individuals without health insurance: The ACA generally requires individual taxpayers to pay an excise tax for each month, beginning January 2014, in which they do not have “qualified” medical coverage for themselves and their dependents. Individuals not maintaining qualified coverage may be eligible for one of several exemptions. As part of our tax questionnaire, in accordance with this provision, you will be asked whether you and your dependents had qualified health coverage during each month of 2014.
  • Reporting of Premium Tax Credit received via gov’t healthcare exchange: Individuals receiving a “premium tax credit” (PTC) through a government health-care exchange are required to file a tax return, even if they otherwise would not be required to do so because of income level, etc. Such individuals should watch their mail for Form 1095-A, which documents, among other items, the amount of PTC received. This form is required to complete the individual’s income tax return. In the event an individual’s income is higher in 2014 than the amount originally estimated in their initial PTC calculation, the individual may be required to repay a portion of the PTC. On the other hand, if an individual’s income is lower than originally estimated, they may qualify for an additional refund. Individuals receiving PTC payments but not filing a return will face termination of future PTC payments.

In addition to impacts on individual taxpayers, the ACA has broad ramifications for businesses of all sizes. Perhaps most concerning for business-owners is the potential application of a $100 per day, per employee, excise tax when such employers provide a medical plan that fails to comply with the new ACA provisions. If you provide health insurance to your employees, or provide a health reimbursement arrangement or medical insurance premium reimbursement arrangement for your employees, we will be happy to address any concerns you may have in this critical area.