I just finished a class on Health Care reform, and I wanted to share with you a few takeaways I got from it. Think of this as Health Insurance Reform for Dummies!
Here is what I got out of what mandates exist for individuals.
As an individual, beginning January 1, 2014, ?you must have Health Care Insurance. The term used is ?minimum health insurance coverage?. Examples of this are addressed by various government sponsored programs such as Medicare Part A, Medicaid and Children?s Health Insurance Program (CHP). It also includes an ?eligible employer sponsored plan?. So if you enroll in your employer?s plan, you are ?probably? done, with a caveat.
You can expect a 1099-like piece of paper certifying that you have coverage, which you will need for your tax return. If you don?t have this form i.e. you don?t have insurance, then you get to pay a penalty.
The gist of the penalty (more complicated than I?m presenting here), ?is calculated based on your 2014 tax return which would be filed in April 2015 at $95 per month for the 12 months in the year 2014 (plus approximately half that amount for each of your of your uninsured dependents), $325 per month in 2015, and $695 per month in 2016 and later respectively.
Ways that you can avoid the penalty are:
1) Your income is?below the filing threshold for filing a tax return
2) You have a hardship as determined by Health and Human Services. You?ll actually have to get a piece of paper from your state exchange that documents this
3) You cannot afford coverage. This is a very complex area where, on your tax return, a calculation is done to determine ?your ?affordability?.
In addition to all this, there are ?Premium Assistance Credits?. For example, if you were to get an individual policy, you could have your insurance provider ?estimate? your income, whereby your net premiums that you would actually pay each month would have been reduced by the ?Premium Assistance Credits?. On your tax return, you would calculate the correct Premium Assistance Credit, and this would be adjusted ?as a credit or additional tax on your tax return.
Individuals who are not offered employer-sponsored coverage and who are not eligible for Medicaid or other programs may be eligible for Premium Assistance Credits for coverage through an exchange. These individuals will generally have income between 138% and 400% of the federal poverty level.
If you enrolled for an employer plan, then you are not eligible for Premium Assistance credits. This is where it can be very tricky for an individual, since it?s possible because your income is so low, that you would be eligible for an individual plan with a state ?exchange?, and be eligible for ?Premium Assistance Credits?. So, an individual would be wise to consult with a health care insurance professional to determine if an individual plan may be better than enrolling in your employer sponsored plan. This is extremely frightening to think an employee could make the wrong decision not realizing that their employer?s plan may be far more costly for them.
Please keep mind that this is a Cliff?s notes version, and is no way complete, but it should give an individual a basic idea of what this legislation is and how it might affect them.? Honestly, I don?t know how anyone?s going to be able to do their own tax return anymore!
My next?installment?will discuss the requirement for businesses! Bet you can?t wait!
Presented by Steven A Feinberg, CPA of Appletree Business Services LLC, a PASBA member accountant, located in Londonderry, New Hampshire, with more than twenty- five years experience on Federal and New Hampshire issues affecting small business, and specializes in tax, payroll? and business planning for his clients throughout the year.? Steve is a recognized member-contributor of the book, Six Steps to Small Business Success. For additional information, you are encouraged to email Steve at info@appletreebusiness.com or call (603) 434-2775.
Steven A. Feinberg ? www.AppletreeBusiness.com ? Get Appletree Blog via Email ? Follow CPAsteve on Twitter
Filed under: Uncategorized Tagged: | 1099, Health Care Reform, income tax, medical expense
Source: http://blog.appletreebusiness.com/2012/09/04/health-insurance-mandates-for-individuals-simplified/
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