Tax Provisions Affected by Health Care Reform 2014 

    Individual Shared Responsibility Mandate

    Beginning January 2014, individuals who do not maintain the proper minimum essential coverage each month, as mandated by the health care reform legislation, or qualify for an exemption will be subject to a tax to be paid on the individual's Federal income tax return.  The penalty is the greater of $95 or 1% of gross income for 2014.  The minimum penalty increases to $325 in 2015 and $695 in 2016.

    IRS Publication 5156 - Facts About the Individual Shared Responsibility Provision
    IRS Publication 5152 - Report Changes to the Marketplace as they Happen

    Final regulations governing the requirement to maintain minimum essential health coverage were issued on August, 2013 and are effective as of December 31, 2013. 

    Proposed regulations [REG-148500-12] were issued on January 30, 2013 and the IRS also provided an FAQ on the topic as well.  In June 2013, the IRS issued Notice 2013-42, which provides relief from the individual shared responsibility penalty for individuals who are eligible for coverage for plans that are not on a calendar year.

    Health Insurance Premium-Assistance Tax Credit

    Beginning in tax years after December 31, 2013, refundable tax credits will be available to eligible taxpayers to help cover the cost of health insurance premiums for individuals and families who purchase health insurance through an insurance exchange.

    How it works: An eligible individual who enrolls in a plan through an exchange will report their income to the exchange. Based on income level, the individual may be eligible to receive a premium assistance tax credit. Treasury will pay the premium assistance credit directly to the insurance plan in which the individual is enrolled. The individual will then pay to the plan the total insurance premium less the amount of the premium tax credit.  An individual or family can choose to have all or a portion of the credit paid upfront to the insurance company to minimize their monthly premium payments. 

    Eligibility:  Eligibility for the tax credit is based on the individual’s income for the tax year ending two years prior to the enrollment period. The credit is available for individuals (single or joint filers) with household incomes between 100% and 400% of the federal poverty level (for the family size involved) who do not received health insurance through an employer or a spouse’s employer. The amount of the credit is determined by the Secretary of Health and Human Services, based on the percentage of income the cost of premiums represents to the relevant family size (from 2% of income for those at 100% of the federal poverty level for the relevant family size to 9.5% of income for those at 400% of the federal poverty level for the relevant family size).

    On May 18, 2012 the IRS issued final regulations related to the credit.  Also, in June 2013 the IRS issued Notice 2013-41which defines the term minimum essential coverage for purposes of the credit.  For more information, on the health insurance premium tax credit see  the website:

    IRS Publication 5120 - Facts about the Premium Tax Credit (flyer)

    IRS Publication 5121 - Facts about the Premium Tax Credit (brochure)

    Draft Form 8962, Premium Tax Credit (PTC) released July 24, 2014

    W-2 Information Reporting on Health Insurance Coverage

    The W-2 reporting requirement that small employers must report, on an employee’s W-2, the cost of health insurance coverage under an employer-sponsored group health plan, slated to begin in 2013 has been delayed until the IRS publishes additional guidance on this subject (per the IRS FAQ - item Q4).

    Cafeteria Plans

    A qualified health plan offered through a health insurance exchange is a qualified benefit under a cafeteria plan of a qualified employer.


    Time for Payment of Corporate Estimated Taxes for 2014


    There will be an increase of 15.75% in the amount of corporate estimated tax payments for corporations with assets of at least $1 billion for payments due in July, August, and September 2014.  This provision was designed to help finance health care reform.



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