The Affordable Care Act, known as ACA or "Obama Care" has left some people confused. Each year since it passed, we have clients who are "surprised" when they receive their tax returns and find that they have incurred a penalty for not having insurance or not having insurance that complies with the ACA. Also, folks who are on a subsidized Obama Care health plan sometimes have to pay back some or all of their premiums because their family income increased from bonuses, raises, new jobs or other increases. When this happens, the person may have to repay some or all of the subsidy they received for their ACA Coverage.
ACA Quick Tips for individuals:
Don't miss open enrollment.
Unless some changes are implemented, open enrollment will begin on 1 November and end 31 January each year. Native Americans and Alaska Natives can enroll anytime. Applicants who are eligible for Medicaid can also enroll throughout the year. There are "Qualifying Events" that may allow you to enroll under a "Special enrollment period". These include birth and adoption events, a permanent move (in some cases), loss of other coverage, and marriage. Proof will be required when claiming a Qualifying Event.
Get Coverage From Your Employer
If your employer offers health insurance, you'll most likely want to take it. The marketplace is only for those whose employers don't offer it, or don't offer enough coverage.
Keep good records
When tax time comes, you'll need to prove you and all your dependents were covered, and what months were included in that coverage. You may otherwise be fined for each person for each month without proven coverage. At the end of the year, you should received a Form 1095A, 1095B, or 1095C depending upon what type of coverage you had for the previous year (Ermployer, Individual, or MarketPlace). Review carefully and keep that form for your records; you may also be requested to supply your CPA with a copy of that form when filing your tax return.
Check for possible refunds
ACA subsidies are called the Advance Premium Tax Credit. If Advance Premium Tax Credits are lower than the amount of premium tax credit calculated on your tax return, they will reduce your tax bill or increase your refund. This is likely to happen if your household income goes down during the year and you do not notify the Marketplace to adjust your subsidy.
ACA Quick Tips for small businesses
The ACA Employer Mandate May Not Apply to Small Businesses
If your company has less than 50 full time employees, you will not be required to provide health coverage. If your number of full time employees fluctuates, and that number stays normally around 45-50, you'll need to keep extra careful records and keep track. Also be aware of what the ACA calls "full time equivalents" which uses a formula to count hours worked by non full time employees as if the were additional employees. You can read more at healthcare.gov, but your the best advice is to let a professional CPA help you with this.
Small Business Health Care Tax Credit
Businesses with fewer than 25 full time employees may qualify for the Small Business Health Care Tax Credit if their employees earn less than $50,000 per year and the business covers at least 50% of their insurance premium purchased through the SHOP Marketplace.
The future of the ACA
The future of the ACA is in question, so close attention to changing legislation is imperative. You're busy running your own business or taking care of your own family. Let Tanya Higginbotham, a Certified Public Accountant who's well equipped to follow and understand these changes, help you keep track of it all.