December 2014 IRS SPEC presentation on ACA

Report
The Patient Protection and
Affordable Care Act (ACA) –
What You Need to Know
Earn It! Keep It! Save It!
December 2014
HHS & Role of the Health
Insurance Marketplace
HHS: Administers the Marketplace and
advance payments of PTC and other
financial assistance
Marketplace: Health Insurance options,
purchases & financial assistance
 HealthCare.gov has more information
2
The Individual Shared
Responsibility Provision
What is the Individual Shared
Responsibility Provision?
Starting in 2014, everyone must either:
Have Minimum Essential Coverage (MEC)*
OR
Have a Coverage Exemption
OR
Make a Shared Responsibility Payment
*Minimum essential coverage must be maintained each month
each month
4
What Information Documents will
an Individual Receive?
 Starting with 2014 tax year:
• Form 1095-A, Health Insurance Marketplace
Statement
 Starting with 2015 tax year:
• Form 1095-B, Health Coverage
• Form 1095-C, Employer-Provided Health
Insurance Offer and Coverage
5
What is Minimum Essential Coverage?
 Employer-sponsored plans, including
COBRA and retiree coverage
 Coverage purchased in individual
market and the new Marketplace
 Coverage under specified governmentsponsored programs
6
Reporting MEC All Year
7
What Qualifies as an Exemption?
Exemptions from coverage requirements:
Member of a:
• Recognized religious sect conscientiously
opposed to accepting insurance benefits
• Health care sharing ministry
• Federally recognized Indian tribe
No filing requirement
Short coverage gap (< 3 months)
8
Additional Exemptions
Hardship (Defined by HHS)
No affordable coverage ( > 8% HHI)
Incarceration
Not lawfully present in U.S.
9
Getting an Exemption
 Obtained from Marketplace or IRS depending
upon the type of exemption
 Exemptions from the Marketplace need to be
obtained at the earliest opportunity
 Exemptions from the IRS can be obtained
only by filing a federal tax return with new
Form 8965
10
When Would an Individual Need to
Make a Payment?
A payment may be due for an individual and
dependents, if they don’t have:
 MEC for every month of the year, or
 An exemption for the months without MEC.
11
How is the Payment Calculated?
 Individual shared responsibility payment calculations are based on the
greater of the percentage of income OR the flat dollar amount
 For families, the shared responsibility payment cannot exceed 3x the flat
dollar amount
 Shared responsibility payment amount may not exceed an amount equal
to the national average premium for bronze level qualified health plans
Greater of
Percentage
1% of household
income
(annual) income
$95 per adult
Flat dollar 50% for
amount individuals under
(annual) 18
2% of household
Income
$325 per adult
50% for individuals
under 18
2.5% of
household
income
2.5% of
household
income
$695 per adult
$695 per adult
50% for individuals plus an increase
under 18
based on cost of
living
50% for individuals
under 18
12
Sample Calculation
Facts:
•
•
•
•
Single individual, no dependents,
No minimum essential coverage for any month
Does not qualify for an exemption
Household income = $40,000 /filing threshold = $10,150
Payment calculation:
• Percentage of income:
$40,000 – 10,150 = $29,850,
1% x $29,850 = $298.50
• Flat dollar: $95
2014 ISRP = $298.50 ($298.50 is > $95)
< the national average for bronze level coverage
13
Sample Calculation
Facts:
•
•
•
•
Married w/two children under 18
No minimum essential coverage for any month
Does not qualify for an exemption
Household income = $70,000/filing threshold = $20,300
Payment calculation:
• Percentage of income:
$70,000 – 20,300 = $49,700,
1% x $49,700 = $497
• Flat dollar: 285 = ((95 x 2) + ($95/2 x 2))
2014 ISRP = $497 ($497 is > $285)
< the national average for bronze level coverage
14
Reporting Shared
Responsibility Payment
15
Individual Shared Responsibility
Provision Summary
Everyone must :
• Have Minimum Essential Coverage,
• An Exemption, or
• Make a Shared Responsibility Payment
MEC is reported on the tax return
Exemptions are reported on Form 8965 filed with
the tax return
The shared responsibility payment is reported on
the tax return
Payment, if due, is reported and paid with the tax
return
16
The Premium Tax Credit
What is the Premium Tax Credit?
Refundable tax credit claimed on new Form 8962
filed with Form 1040
To help eligible individuals and families pay for
health insurance
Two payment options:
• Get it Now – advance credit payments
• Get it Later – without advance credit payments
Marketplace administers Advance Payment of
PTC (APTC)
18
PTC Eligibility
You may be eligible if you meet all of the following:
buy health insurance through Marketplace
are ineligible for coverage through employer or government
plan
are within certain income limits
do not file a Married Filing Separately tax return (unless you
meet the criteria in section 1.36B-2T(b)(2) of the Temporary
Income Tax Regulations, which allows certain victims of
domestic abuse and spousal abandonment to claim the
premium tax credit
cannot be claimed as a dependent by another person
19
2014 Income Limits Based on 2013
Federal Poverty Line (FPL)
One Individual:
$11,490 (100% FPL) - $45,960 (400% FPL)
Family of Two:
$15,510 (100% FPL) - $62,040 (400% FPL)
Family of Four:
$23,550 (100% FPL) - $94,200 (400% FPL)
Example: Based on the 2013 FPL, a family of four could
have a household income up to and including $94,200
and still be eligible for the PTC.
20
Key Considerations
Advance credit payments are optional.
Reconciling advance credit payments is
required and a tax return must be filed.
Differences between advance credit
payments and the credit are likely.
Changes in circumstances can affect the PTC
amount.
21
Changes in Circumstances Can Affect
the Credit
Changes in circumstances can affect:
• Eligibility for the PTC - even if not
previously eligible
• Amount of the premium tax credit
Report changes to HealthCare.gov or state
marketplace website promptly
Reporting changes will help ensure receipt of
the proper amount of advance payments of the
premium tax credit
22
Major Changes in Circumstances
Birth or Adoption
Marriage or divorce
Increases or decreases in number of dependents
Moving to another address
Increase or decrease in your income
Gaining or losing health care coverage or eligibility
Changes in filing status
Note: For additional examples of life events go to
Healthcare.gov
23
What Information Document
Will an Individual Receive?
Form 1095-A (Health Insurance Marketplace
Statement) will be issued by the Health
Insurance Marketplace
• Sent by January 31
• Shows:
• Documentation of coverage by month
• Premiums, and
• Advance payments of PTC
24
What’s on PTC Form 8962
Annual & Monthly Contribution
PTC Claim & Reconciliation
Repayment of Excess of Advance
Payment
Shared Policy Allocations
Alternative Calculation for Marriage
25
How Does Reconciliation Work?
Advance payments $4,000
Calculation of PTC - $3,000
Difference
$1,000
Repayment amount = $1,000 *
*Amount from Form 8962 that would be entered on
Form 1040 (may be subject to a repayment cap)
Note: A tax return must be filed to reconcile advance credit
payments regardless of any other filing requirement.
26
What are Repayment Caps?
36B Advance Repayment Limitations
Household Income
Single Filing
Status
Any Other Filing
Status
Less than 200%
$300
$600
At least 200% - less than
300%
$750
$1,500
At least 300% - less than
400%
$1,250
$2,500
400% or more
N/A
N/A
(as % of Federal Poverty
Line)
27
Premium Tax Credit Example
•
•
•
•
•
•
•
28
Ervin is single and had household income of $28,725
FPL for single: $11,490 – 100%
$28,725/$11,490 = 250% (.0805)
$28,725 x .0805 = $2,312 (Ervin’s Share)
Ervin enrolled in health plan with premium of $5,000
Benchmark premium plan – $5,200
$5,200 - $2,312 = $2,888 PTC
2014 Regional Meeting - Phoenix
Net PTC and Repayment of
Excess Advance PTC
Form
1040
29
2014 Regional Meeting - Phoenix
Premium Tax Credit Summary
Refundable credit for only eligible individuals
Get it Now (advance credit payments) or Get it
Later (without advance credit)
Report changes in circumstances
Advance credit payments must be reconciled
Everyone who receives this credit must file a
tax return
Use form 1095A, Form 8962 and Form 1040
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ACA Intake Questions
31
TaxWise Worksheet 8
32
What Do Taxpayers Need?
For all taxpayers:
Type of health insurance for themselves, their
spouse, and their dependents
For taxpayers who do not have insurance for
themselves, their spouse, and/or their
dependents:
Income information for themselves, their spouse,
and their dependents
Exemption Certificate Number of any Marketplacegranted coverage exemptions for themselves, their
spouse, and their dependents
33
What Do Taxpayers Need?
For taxpayers who acquired health insurance
through the Marketplace for themselves, their
spouse, and/or their dependents
Form 1095-A, Health Insurance Marketplace
Statement
Income information for themselves, their spouse,
and their dependents
Note: If a dependent on your return is covered on another
taxpayer’s policy, or if someone on your policy is claimed
as a dependent on another taxpayer’s return, you may
need information from the other taxpayer’s return and/or
Form 1095-A.
34
ACA Resources
 VITA/TCE Materials
• Publication 5157
• Publication 4012, ACA Tab
 Form 8965 and Instructions
 Form 8962 and Instructions
 Publication 974
35
ACA Web Resources
IRS.gov/ACA
HealthCare.gov
36

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