Affordable Care Act
In March 2010, President Obama signed into law new health care reform. The legislation was in two parts consisting of H.R. 3590, the Patient Protection and Affordable Care Act, PL 111-148, and H.R. 4872, the Health Care and Education Reconciliation Act of 2010, P.L. 111-152. Collectively, these laws are known as ObamaCare, PPACA or ACA.
While the primary purpose of this reform is to mandate that all U.S. residents obtain health insurance coverage, the law creates a host of tax credits and penalties on employers and taxpayers for failure to do so. In addition, there are several new rules that were created to raise the necessary funds to pay for this reform.
The Patient Protection and Affordable Care Act includes health insurance and tax law changes. Several measures of the Affordable Care Act, also known as Obamacare, have been implemented, but the most significant changes take effect in 2014 and 2015, including:
Requires most Americans to have qualified health insurance as of Jan. 1, 2014. Coverage can be obtained through employer-sponsored plans, government programs such as Medicare or Medicaid, private plans or through the new federal or state marketplaces, also called health insurance exchanges.
Premium tax credits and financial assistance
Available to qualifying individuals who don’t have access to employer-provided coverage and purchase health insurance through a marketplace. Eligibility and amounts are based on the cost of marketplace premiums and your household size and income. The credit will be paid directly to the health insurance company to help cover monthly payments. If you elect to receive a lesser credit or no credit at all, you can claim the refundable credit on your 2014 tax return (due April 15, 2015).
Tax penalty for uninsured
If you don’t have health insurance for a total of 3 or more months in 2014, you may be subject to a penalty payable on your tax return due April 15, 2015. The amount is based on the number of uninsured individuals in your household and household income.
Small business mandate
Starting in 2015, businesses with more than 50 FTE employees in 2014 (or a combination of full-time and part-time employees equivalent to 50 FTE employees) must either offer a minimum level of health care coverage to employees and their dependents, or pay the IRS Employer Shared Responsibility payments for any FTEs who purchase coverage through a marketplace and receive the premium tax credit.