Posts Tagged ‘Affordable Care Act’

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Here Comes the Health Care Penalty:

In Accounting & Finances,Business,Taxes on December 15, 2015 by Sufen Wang Tagged: , , ,

More than 7.5 Million Taxpayers Affected

AppleAn apple a day keeps the doctor away…but unfortunately not a penalty for having no health insurance. 2014 was the big year that most Americans had to get health insurance under the Affordable Care Act. People who didn’t comply would get hit with a tax penalty when it came time to file their 2014 tax returns. The size of that penalty, as with most tax-related things, would depend on factors such as income and family size.

ImprimirAfter the rush hour of tax filing season died down each year, the IRS conducted a “substantial data review” to see how things went and to figure out how to move forward. The 2015 filing season was no different, except this time around the agency’s results included preliminary stats on the damage done in terms of ACA tax penalties. IRS Commissioner John Koskinen’s letter to Congress on July 17 estimates that 7.5 million taxpayers paid the aforementioned penalty for lacking health care.

That adds up to about $1.5 billion paid in so-called “individual shared-responsibility payments.” In layman’s terms, taxpayers and/or their dependents got dinged for any month in 2014 they didn’t maintain health coverage (or qualify for an exemption). Broken down, the individual payments weren’t huge, but still certainly left taxpayers’ piggy banks with cuts and bruises at tax time, with 95% facing a penalty of $500 or less.

Towards the end, Koskinen’s letter points out that “the vast majority – 85 percent – of taxpayers reporting a shared responsibility payment still reported a refund.” This statement paints perhaps too nice and neat of a picture – sure, a lot of the taxpayers may have gotten some money back, but the fact is that they still also had to pay for not having health coverage, and a lot more people had to pay to have health coverage.

Health-Care-Piggy BankThat being said, a number of taxpayers were granted a certain amount of relief via the Premium Tax Credit (PTC), or the APTC – the latter of which is basically advance PTC payments made directly to insurance providers to reduce premiums throughout the year. APTC makes things easier up front, but comes with the stipulation that at tax time, those advance credit payments need to be reconciled with the actual PTC allowed. Around 2.7 million taxpayers claimed the premium tax credit in 2014, with an average credit of $3,400 per taxpayer.

Injured Piggy Bank WIth Crutches

Koskinen’s letter also noted some hiccups and glitches in reporting, e.g. the “5.1 million non-dependent taxpayers [who] did not check the box, claim a health care coverage exemption, or report an individual shared responsibility payment,” along with the “continued erosion of taxpayer services” (hint, hint Congress – don’t reduce the IRS budget further). While paying a health care penalty will probably never get less painful for taxpayers, hopefully the IRS can streamline things so that the penalty-paying process doesn’t require a doctor’s visit for stress!

Sufen Wang, M.S.Accountancy
Wang Solutions, Long Beach, CA (562) 856-0793
Editor: Hannah Huff, M.F.A. Creative Writing: Poetry, (626) 806-5805

 

Articles

The Affordable Care Act Gets a Check-Up…

In Accounting & Finances,Business,Insurance & Liability,Taxes on August 29, 2011 by Sufen Wang Tagged: , , , ,

IRS Prescribes Premium Tax Credit Regulations
 
There’s some good news and bad news this month. The good news is that the IRS proposed regulations on August 12 for health care premium tax credits – which means affordable healthcare is one step closer to becoming a reality. The bad news is that the IRS proposed regulations for health care premium tax credits – which means you might be ineligible to receive them.
 

The health insurance premium tax credits were created under the Patient Protection and Affordable Care Act (ACA) of 2010. When the ACA goes into effect in 2014, individuals who are unable to access affordable health insurance through their employers will be able to buy insurance through state-run insurance exchanges. The tax credit is geared toward lower and middle-income individuals who can’t afford to pay their premium costs out-of-pocket.

Of course, calculating the credits will be another task for tax return preparers…..

So who exactly can get the tax credit? The IRS regulations say you must be an applicable taxpayer with a household income between 100 percent and 400 percent of the federal poverty line. That’s about $22,350 to $89,400 for a family of four. Applicable also means you can’t be claimed as a dependent by another taxpayer and if you’re married, you have to file a joint return. The tax credits will average $5,000 per individual.

You also won’t be eligible if you have “minimum essential coverage” available through your employer. Under the ACA, businesses with more than 50 full-time workers over the course of a year will face tax penalties of up to $3,000 per employee if they fail to offer affordable coverage (the regulations help define affordable). Employers must report which employees are not covered by insurance and are thus eligible to participate in health insurance exchanges.

The IRS wants to hear what you think about the proposed regulations! Give them a piece of your mind by October 31:

 http://www.regulations.gov/ 

via e-mail at E-OHPSCA2715.EBSA@dol.gov.

On the Money,
Sufen Wang
Wang Solutions