Monthly Archives: January 2015

Don’t Delay in Knowing How Obamacare Impacts Your 2014 Taxes

Time:Tax preparation and filing is not on the top list of enjoyable experiences for most people. It requires tedious effort and documentation. This year, we will all have the added excitement of figuring out how the Affordable Care Act (ACA/Obamacare) figures into our 2014 tax filing.

For most of you, the good news is that the only change to your normal tax filing routine will be to “check” the box (line 61) on your 1040 tax form that indicates that you’ve had health insurance for the entire year of 2014.  If you have GROUP health insurance coverage (employer-based) or Medicare, then that’s all you have to do!  The law requires you to have “minimum essential coverage” which all group plans and individual health plans are considered. The only caveat to that is short-term health insurance, defined as less than twelve months, is NOT considered minimum essential coverage.

If you had have the “minimum essential coverage” for only part of 2014, it becomes more complicated.  That’s where a tax advisor comes into play. I share with clients that I spend a lot of money on accounting services each month, so I’m in no position to give tax advice. What I can recommend is to allow yourself time to do your own research and select a tax advisor sooner than later, since their busy season has already begun.

I feel the area of greatest confusion is for those who received a “premium tax credit” or Federal subsidy and purchased through coverage through www.healthcare.gov  because there is a reconciliation process between your estimated and actual 2014 household income.  In addition, those individuals will receive a Form 1095-A from the Federal Marketplace.  This document will be used to complete Form 8962 and then attached to the 1040.

The first year of tax filing will probably be bumpy for many people, particularly for those with complex family situations (i.e. divorce, dependent children, job loss, income change, covering young adults who file their own taxes, etc.).

We encourage clients to use the guide created by the IRS to help you navigate through the process. Here is a link to the IRS Guide on ACA Mandate 2014.

Healthcare Updates for January 2015: Renewals, Changes, Enrollments

HiResHappy New Year, and what a year it’s been!  Two open enrollments, lots of special enrollments, and a whole lot of “early renewals” to be done within about a 30-day window! I can’t believe that we actually were able to renew every single client from October 15 (open enrollment for our Medicare clients), to December 31.  A special thank you to all of our clients, for your patience during that time! It’s a new world in the health insurance industry. Gone is efficiency. We were overwhelmed with only 30-days to renew all of our individual clients, and now the insurance companies are in the midst of trying to enter (or renew) all of the business!  Please be patient with the carriers as they revise the billings and enrollment changes!

Last week, the Department of Health & Human Services released a report stating that 87% of those who enrolled (or re-enrolled) through www.healthcare.gov were qualified to be eligible for Federal subsidies.  Truth be told the only persons who should be enrolling through the federal website are those who are eligible for the tax credits. Otherwise, it’s a very cumbersome way to buy individual health insurance.  If a client is deemed to be over the 400% of the Federal Poverty Level, we help them enroll directly with the insurance carrier. No need to provide the Federal Government all of your income and household information unless necessary. Overall, there needs to be more consumer awareness of the Federal Poverty guidelines.

Considering the cumbersome tax forms that will now need to be filed (starting this month) if you do receive the Federal tax credits, what was thought of earlier this year as “free money” to help subsidize health insurance premiums, may cost more, because of the required tax filing. I consult with many clients who have been unaware that the tax credits actually are tax refund dollars that you can use today to “buy down” or lower the cost of your monthly health insurance premiums.

I think that this winter will prove a most interesting time, not only in our industry, but also in the tax world.  Remember, the Affordable Care Act was designed as “insurance” and “tax reform”.