IRS Healthcare

Key Provisions of the Affordable Care Act

The Affordable Care Act (ACA) makes extensive changes to the U.S. healthcare system. The text of the Affordable Care Act is expansive and complex, leaving many businesses and individuals unsure about what the law requires and how it impacts them.

The ACA aims to provide affordable, quality health care for all Americans. In order to reach this goal, the law mandates that large companies (defined by businesses with at least 50 full-time employees) offer health insurance to their employees in 2015. In addition, starting in 2014, uninsured individuals must obtain health insurance. Those individuals and companies who fail to comply will face penalties, including fines and possible criminal charges.

Although the Affordable Care Act is not a tax bill, it contains a large number of tax provisions. These provisions, which are administered by the Internal Revenue Service (IRS), include new reporting requirements, the imposition of certain tax penalties, and new obligations to make payments with a tax return.

Given the broad scope of the ACA, it is important that employers and individuals with questions or concerns discuss the law with an experienced Washington, DC tax attorney to ensure compliance with the new tax provisions.

Affordable Care Act Coverage Requirements for Businesses

According to the Affordable Care Act, businesses with 50 or more full-time equivalent employees are required to provide “affordable, minimum essential coverage” to their employees. The penalties for failing to do so will not begin until 2015, but the IRS is encouraging employers to begin complying with these requirements this year.

Effective in 2015, companies that fail to meet the ACA coverage requirements may face certain “play or pay” penalties, including having to pay an annual tax penalty of $2,000 for the number of full-time employees over a 30-employee threshold.

Additionally, beginning in 2015 companies with 50 or more full-time employees must file an annual return with the IRS that reports what health insurance they offer to their employees, if any.

Businesses with less than 50 employees will not face any penalties, but are encouraged to provide health insurance to their employees. They may be eligible for certain credits and other benefits if they do.

Affordable Care Act Coverage Requirements for Individuals

Beginning in 2014, most Americans will be required to purchase health insurance coverage or pay a tax for each month in which they do not maintain minimum coverage. Taxpayers without coverage will be required to include the tax in their annual IRS income tax return. The timeline for these fees are outlined below.

  • In 2014, the tax penalty is a flat $95 or one percent of an individual’s income (whichever is greater).
  • In 2015, the tax penalty will increase to $325 or two percent of the individual’s income (whichever is greater).
  • In 2016, the flat rate increases to $695 or 2.5 percent of the individual’s income (whichever is greater).

In addition to paying these tax penalties, individuals without health insurance coverage are liable for 100 percent of their medical bills. Individuals with incomes below a certain level may qualify for premium tax credits, and/or subsidies, to help pay for the cost of their insurance.

A Washington, DC Tax Attorney Can Help You Comply

The attorneys at Thorn Law Group are committed to working with businesses and individuals to ensure they fully understand and comply with the new requirements imposed by the Affordable Care Act. Our legal team is comprised of a diverse group of professionals, including former IRS attorneys who are experienced in interpreting complex tax laws and regulations, including ACA reporting issues.

Each, DC tax attorney at our firm is prepared to help businesses plan for and structure their benefit programs to meet the Affordable Care Act’s requirements. We also counsel individual taxpayers on how to best factor the ACA’s new requirements into their personal tax planning. Our staff is prepared to assist our clients with any enforcement proceedings or penalties.

To learn more about how a tax attorney at Thorn Law Group can work with you, contact our law offices today. Together we can prepare and develop strategies that work for your business and follow the new law.

Kevin E. Thorn can be reached at (202) 349-4033 for a confidential consultation.





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