Jan 15 2014
I was recently at a two day session on tax preparation for the upcoming year(s). I know…I know, who would willfully do that? One quarter of the instruction covered the tax implications of the Affordable Care Act (ACA) also known as ObamaCare. That is how big a presence the IRS will have in enforcing this law.
I know a lot of the readers of this blog have TRICARE or other government coverage and don’t need to worry too much about ObamaCare. But, a lot of us have relatives (like kids) who will be affected. A lot of this is still being determined, but here is what I’ve learned so far. In no particular order…
- There are new forms to fill out for some of us. Those with earned income in excess of $200,000 (Married or Single) will have to complete a new Form 8959. Those with total income (AGI) in excess of $250,000 ($200,000 Single or HoH) and investment income will need to complete a Form 8960. This applies now, as in the 2013 tax year.
- Families who purchase insurance on the exchanges that want to qualify for subsidies will have to calculate a new number…family income. This will include the income of all individuals listed on the Form 1040 (i.e. dependents). So if Junior has a summer job, his income will be counted towards family income. If things line up just right (or wrong, depending on your point of view) Junior’s income could cause a family unit to lose subsidies.
- When applying for insurance on the exchange you can receive a subsidy (if qualified) for insurance. This subsidy is paid directly to the insurance company. To receive the subsidy, the taxpayer will need to estimate income for the upcoming year. If the income is estimated too low, then when taxes are filed the taxpayer will need to pay back the “undeserved” subsidy.
- You are required to have qualifying coverage. If not, the taxpayer will be subject to a fine (I mean tax, according to the Supreme Court). Everyone has been talking about the $95 per adult penalty (it is also $47.50 for children, max of two). BUT, the law also states the fine is 1% of Family Income whichever is GREATER.
- There are requirements to prove that you have insurance. For those with insurance provided completely by their employer, insurance coverage will be documented on the W-2. For those that pay for insurance themselves there will be yet another form to get prior to filing your taxes. The form should be called a 1099-HTC. Finally, for those who receive coverage from the government (TRICARE, MEDICARE) I think the IRS will go into your electronic records to verify coverage.
- The IRS has no authority to levy or assess to enforce the penalty. They can only withhold penalties from refunds. So, in other words, if you never have a refund due, you’ll never have to pay the penalty. However, the penalty will incur interest and they may eventually get you with your final tax return.
Those are some of the big things. I’ll keep an eye on this for you and provide updates here as I learn them.
For more information on health care for veterans, servicemembers and their families, including the latest on TRICARE premiums, long term care, and pharmacy options, visit www.moaa.org/health.