Love it or hate it, the Affordable Care Act’s implementation is here. And, the IRS will be involved. I have tried to outline a few of the key early dates that have tax implications for individuals and businesses, starting with the first, which truly is just around the corner.
October 1. The health insurance Marketplace will open. This is the beginning of a sort of open enrollment process where you would apply for coverage, compare plans, and enroll. The place to start is www.HealthCare.gov. Depending upon where you live, you will use the process at HealthCare.gov (Virginians, this is you) or you will be directed from this website to your state’s Marketplace website. So far, so good, as far as the IRS is concerned.
January 1. Coverage could start as early as January 1, 2014. Here is where the IRS gets involved. If someone who can afford health insurance does not have coverage in 2014, he or she will have to pay a fee, as part of filing income tax returns. The fee in 2014 is 1 percent of your yearly income or $95, whichever is higher. The fee goes up in future years. (To avoid confusion, if you have health coverage through a government sponsored plane like Medicare or Medicaid, you do not need to purchase coverage through the Marketplace. This is also true for most employer-sponsored plans.)
And, more in future posts…
Large (over 250) employers already are supposed to report to employees, via FormW-2, the aggregate cost of the employer-provided health insurance coverage. Currently, this reporting is optional for small employers (those filing fewer than 250 W-2s), but that could change as early as January 2014, as new regulations are drafted.
Starting in 2018, the Affordable Care Act will impose a 35 percent tax on employer-provided health plans that exceed $10,200 for individual coverage and $27,500 for family coverage. The idea is to limit the tax code’s currently unlimited deduction for employer-provided health insurance.
And, for tax years 2013 and beyond, high income taxpayers may face additional taxes, including a Hospital Insurance tax and a Medicare Contribution tax on certain unearned income.
There is so much more to know and learn as each day passes and new provisions come into effect. Stay tuned for future and ongoing posts.
Cari Lyn Pierce
Lowrance Law LLC