The beginning of 2014 will see many important tax changes passed in the Affordable Care Act (ACA) go into effect. Other laws in the ACA scheduled to go into effect have been postponed, such as the employer mandate. This newsletter will identify and summarize some of these key tax changes and their respective effective dates.

Affordable Care Act

When Congress passed the ACA in 2010, it delayed the effective date of several key provisions until 2014. In July 2013, the Obama administration announced a further delay in the ACA employer shared responsibility payment provision (also known as the employer mandate). The individual shared responsibility provision (known as the individual mandate) has not been delayed and starting in 2014, individuals must carry health insurance or otherwise pay a penalty unless exempt.

Employer Mandate

The ACA requires that an applicable large employer pay an assessable payment if either:

• The employer does not offer to its' full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan and any full-time employee is certified to the employer as having received a premium assistance tax credit or cost-sharing reduction; or
• The employer offers its' full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan and one or more full-time employees is certified as having received a premium assistance tax credit or cost-sharing reduction.

An applicable large employer for purposes of the employer mandate is one that employees an average of 50 or more full-time equivalent employees.

Individual Mandate

Beginning January 1, 2014, the ACA generally requires individuals to carry minimum essential coverage for each month, qualify for an exemption or make a payment when filing his or her return. Minimum essential coverage for purposes of the individual mandate is employer-sponsored coverage, coverage through a state or federal Marketplace, Medicare, Medicaid, and other plans. Certain individuals may be exempt, including individuals whose income is below the minimum threshold for filing a return, members of a health care sharing ministry, individuals unlawfully present in the U.S., and others.

Premium Assistance Tax Credit

The  ACA created the Code Sec. 36B premium credit to help offset the cost of health insurance coverage obtained through a Marketplace.  Individuals with "household incomes" between 100 and 400 percent of the Federal Poverty Level (FPL) based on their respective family size are eligible for the credit.

Married taxpayers must file a joint return to be eligible, and taxpayers that are dependents on another's return are ineligible for the credit.

Employer Reporting

Applicable large employers will be required to file an information return (known as a Code Sec. 6056 return) that reports the terms and conditions of the health care coverage provided to the employer's full-time employees for the year. Health insurance issuers, sponsors of self-insured health plans, government agencies, and other entities that provide minimum essential coverage must file similar information returns (known as Code Sec. 6055 returns).

Under proposed regulations, an applicable large employer would generally report information about coverage (including contact information for the employer and the number of full-time employees) as well as a list of full-time employees and information about coverage offered to each, by month, including the cost of self-only coverage.

Applicable large employers also must furnish Code Sec. 6056 statements to qualified employees. The statements would describe, among other things, information about coverage.

W-2 Health Care Reporting

Separate from Code Sec. 6056 reporting (discussed above), the ACA requires employers that provide applicable employer-sponsored coverage to report the cost of that coverage on the employee's Form W-2, Wage and Tax Statement. Small employers - generally employers filing fewer than 250 Forms W-2 for the previous calendar year - are temporarily exempt from reporting. Other entities, such as multi-employer plans, are also eligible for the temporary relief.

Notice to Inform Employees of Health Coverage under the FLSA

As of October 1, 2013, employers that are covered by the Fair Labors Standards Act (FLSA) must provide a written notice to its employees about the Health Insurance Marketplace. However, there is no fine or penalty under the law for failing to provide the notice. Employers are also required to provide this notice to new hires within 14 days of an employee's start date.

For employers who have failed to provide the notice to their employees, we recommend sending the notice as soon as possible to comply with the regulations.  For any questions regarding the notice or for a model notice, please see the technical release from the United States Department of Labor.

Health Care Resources

More information about the ACA is available at:

• IRS - Affordable Care Act Page 
• Kaiser Family Foundation 
• the White House 

If you have any questions regarding the Affordable Care Act, please contact our office. We can schedule an appointment to discuss how the changes in the new law may affect your tax position.

Sincerely yours,