Tax Provisions Affected by Health Care Reform 2014 


    Individual Shared Responsibility Mandate

    Beginning January 2014, individuals who do not maintain minimum essential coverage for each month or qualify for an exemption, will pay a fee, also referred to as a tax, on their Federal income tax return.  For 2014 the penalty is the greater of $95 ($47.50 per child under 18) or 1% of gross income.  There is a cap on the penalty equal to the average premium for a bronze level health plan purchased in the Marketplace, also known as an exchange.  That amount for 2014 is $204 per Revenue Procedure 2014-46.  The minimum penalty increases to $325 in 2015 and $695 in 2016.

    For more information, check out the following IRS resources and regulations:

    IRS Publication 5156 - Facts About the Individual Shared Responsibility Provision

    IRS Publication 5152 - Report Changes to the Marketplace as they Happen

    Final regulations were issued on August, 2013 and are effective as of December 31, 2013. 

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


    Health Insurance Premium-Assistance Tax Credit

    Refundable tax credits became available on January 1, 2014, 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 or family who enrolls in a plan through an exchange will report their income to the exchange. Based on income level, the individual or family may be eligible to receive the 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.  If this option is chosen, Treasury will pay the credit directly to the insurance plan in which the individual is enrolled.  The individual will then pay the plan the total insurance premium less the amount of the premium tax credit.  A reconciliation will be done as part of the taxpayer's federal income tax return to determine if they are due any additional credit or if they have to repay any of the credit.  The reconciliation will be done on Form 8962, Premium Tax Credit.   Draft Form 8962, Premium Tax Credit (PTC) was released July 24, 2014.  In order to avoid a large repayment of the credit, individuals or families should report any life or income changes to the Marketplace as soon as they happen.   For more information on how to do this, refer to IRS Publication 5152 Report Changes to the Marketplace as they Happen

    Eligibility:  You must meet all of the following requirements to be eligible for the credit:
         * health insurance must be purchased on an exchange
         * not eligible for coverage through an employer or government plan
         * income must be within certain limits
         * cannot be claimed as a dependent on another persons tax return
         * do not file Married Filing Separate, except certain victims of domestic abuse, Notice  2014-23
        
    For more information on the credit go to:

    On May 18, 2012 the IRS issued final regulations

    The IRS issued Notice 2013-41, in June 2013, which defines what is considered minimum essential coverage for purposes of the credit.  

    www.healthcare.gov.

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

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



    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).
     
    Coming Soon - A Guide to W-2 Reporting


    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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