AFFORDABLE CARE ACT
One of the most far-reaching requirements, the individual shared responsibility provision, took effect on January 1, 2014. However, another key provision –the employer shared responsibility requirement– was delayed to 2015; as was applicable large employer reporting. The IRS also issued guidance on the Code Sec. 36B premium assistance tax credit and other provisions of the Affordable Care Act.
Small employers, ones with fewer than 50 full-time employees or a combination of full-time and part-time employees that is equivalent to fewer than 50 full-time employees, are permanently exempted by the Affordable Care Act from the employer mandate.
For 2015, employers with at least 50 but fewer than 100 full-time employees, including full-time equivalent employees, may be eligible for transition relief (TD 9655). The IRS imposed a number of requirements that employers must satisfy before they may be eligible for the transition relief.
Under the transition relief employers with 100 or more full-time employees, including full-time equivalent employees, may only be required to provide coverage to 70 percent, instead of 95 percent, of qualified employees in 2015.
In Notice 2014-49, the IRS described two methods for determining whether a worker is a full-time employee:
|(1)||the monthly measurement method; and|
|(2)||the look-back measurement method.|
Employer reporting under Code Sec. 6056 (and insurer reporting under Code Sec. 6055) is needed for the administration of Code Sec. 4980H and the Code Sec. 36B premium assistance tax credit. The IRS issued final regulations in 2014 in TD 9661.
Mandatory reporting begins in 2016 for 2015.
Individual Shared Responsibility
On 2014 individual income tax returns, individuals will report if they had minimum essential health coverage for all or part of the year, unless exempt. Individuals who are not covered by minimum essential coverage and who are not exempt are liable for an individual shared responsibility payment.
A number of exemptions from the individual shared responsibility provision are available to qualified individuals. In 2014, the IRS developed Form 8965, Health Coverage Exemptions. Individuals claiming an exemption from the requirement to carry minimum essential health coverage will file Form 8965 with their federal income tax return.
Code Sec. 368 Credit
Individuals who obtain health insurance coverage through the PPACA Marketplace may be eligible for the Code Sec. 36B credit. In November, the Supreme Court announced it would review a decision by the Fourth Circuit Court of Appeals upholding IRS regulations on the Code Sec. 36B premium assistance tax credit (King v Burwell, 20142 USTC 750,367). The Supreme Court has scheduled oral arguments for March 2015.
Individuals will need to refer to the information on Form 1095-A to complete Form 8962. Individuals will calculate the amount of their credit and subtract the total amount of advance payments received.
Small Employer Tax Credit
The IRS finalized regulations on the Code Sec. 45R small employer health insurance credit (TD 9672). Generally, a qualified employer must have no more than 25 full-time equivalent employees (FTEs) for the tax year; pay average annual wages of no more than $50,000 per FTE (indexed for inflation after 2013); and maintain a qualifying health care insurance arrangement.
For tax years 2010 through 2013, the maximum credit is 35 percent of health insurance premiums paid by qualified employers (25 percent fir small tax-exempt employers). The credit is 50 percent for qualified employers (35 percent fir small tax-exempt employers) after 2013. In tax years that begin after 2013, an employer claiming the Code Sec, 45R credit must obtain coverage through the Small Business Health Options Program (SHOP) Marketplace or be eligible for an exception.
The IRS, HHS and DOL adopted final regulations that describe the requirement for dental and vision benefits and employee assistance programs (EAPs) to be treated as excepted benefits under the PPACA (TD 9697).
90-Day Waiting Period
The IRS, HHS and DOL issued final regulations implementing the 90-day waiting period limitation under the PPACA for employer health insurance coverage (TD 9656).
Health Savings Accounts
The IRS announced in Rev. Proc. 201430 that for calendar year 2015 the annual limitation on deductions under Code Sec. 223(b)(2) for an individual with self-only coverage under a high-deductible plan (HDHP) is $3,350 (up from $3,300 in 2014) and $6,650 for an individual with family coverage (up from $6,550 for 2014).