The IRS and the U.S. Department of Health and Human Services (HHS) are planning outreach efforts during filing season to remind taxpayers about new requirements under the Affordable Care Act. These projects will highlight the individual shared responsibility requirement, exemptions to the individual mandate, and more. The IRS has already posted information about the Affordable Care Act on its website for taxpayers and tax professionals. The agency reported it will continue to work with tax professionals to give individuals the information they need to file their returns.

Shared Responsibility Payment

Unless exempt, individuals without minimum essential coverage will make a shared responsibility payment. For 2014, the individual shared responsibility payment is the greater of one percent of household income that is above the tax return filing threshold for the individual’s filing status; or the individual’s flat dollar amount, which is $95 per adult and $47.50 per child, limited to a family maximum of $285, but capped at the cost of the national average premium for a bronze-level health plan available through the Marketplace in 2014.

For 2014, the annual national average premium for a bronze-level health plan available through the Marketplace is $204 per month per individual, but $1,020 per month for a family with five or more members. In January, the IRS announced the 2015 monthly national average premium for qualified health plans that have a bronze level of coverage for taxpayers to use in determining their maximum individual shared responsibility payment. The monthly national average premium for qualified health plans that have a bronze level of coverage and are offered through ACA Marketplaces in 2015 is $207 per individual but $1,035 per month for a family with five or more members.

Exemptions

The ACA exempts certain individuals from the shared responsibility requirement. Some exemptions may be claimed when an individual files a return. Others are only available through the ACA Marketplace, and others may be claimed either way.

The IRS anticipates that many individuals will seek an exemption based on a hardship. Among the circumstances that may qualify for a hardship exemption are (not an exhaustive list): the taxpayer was evicted in the past six months or was facing eviction or foreclosure; the taxpayer recently experienced the death of a close family member; or the taxpayer experienced a fire, flood, or other natural or human-caused disaster that caused substantial damage to his or her property; or the taxpayer filed for bankruptcy protection in the last six months. In most cases, individuals will seek a hardship exemption through the ACA Marketplace. If granted, the Marketplace will issue a certificate to the individual, who will enter that number on his or her Form 8695, Health Coverage Exemption.

Along with hardship, a number of other exemptions are available. They include exemptions based on the short coverage gap, incarceration, income below the filing threshold, and more.

Self-Reporting

Individuals who had minimum essential coverage in 2014 will self-report on their return. Individuals will “check a box” to declare they carried minimum essential coverage. The check box is located on Line 61 on Form 1040, U.S. Individual Income Tax Return, Line 38 on Form 1040A, and Line 11 on Form 1040-EZ.

Employer Reporting

Code Sec. 6056 requires applicable large employers (an employer that employed an average of at least 50 full-time employees on business days during the preceding calendar year) to file information returns with the IRS and provide statements to full-time employees about health insurance coverage. Code Sec. 6055 imposes a similar requirement on health insurance issuers, plan sponsors of self-insured group coverage, and others. The IRS has issued draft forms for Code Sec. 6055 and 6056 reporting and is expected to finalize the forms, and instructions, in 2015.

The new reporting requirements were optional for 2014. They are mandatory for 2015. An applicable large employer must file information returns with the IRS and furnish statements to employees beginning in 2016 to report information about its offers of health coverage to its full-time employees for the calendar year 2015.

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Content provided by CCH. If and only to the extent that this publication contains contributions from tax professionals who are subject to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, the publisher, on behalf of those contributors, hereby state that any U.S. federal tax advice that is contained in such contributions was not intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose.