Tag Archive: Internal Revenue Service

IRS updates individual health insurance mandate exemption filing instructions

Just in time for tax season, the Internal Revenue Service recently updated information on how to file for an exemption from the Individual Shared Responsibility requirement to maintain qualifying health insurance coverage for tax year 2014. The update (linked below) lists 19 types of exemptions and how to file for them using IRS Form 8965. Most can be claimed directly on the form while six types of exemptions require a certificate of exemption be obtained or requested from the taxpayer’s state health benefit exchange. Three exemption categories can be claimed either with an exchange certificate of exemption or directly on Form 8965.

Individual Shared Responsibility Provision – Exemptions: Claiming or Reporting.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Employees offered group plans without hospitalization coverage eligible to use advance tax credit subsidies for exchange plans

Employees offered employer-sponsored health plans without coverage for hospitalization are eligible for advance tax credit subsidies for individual coverage in the state health benefit exchange marketplace, according to Internal Revenue Service guidance issued this week.

Notice 2014-69 clarifies that such plans do not provide minimum actuarial value (MV) covering 60 percent of expected health care utilization costs, which entitles employees to use tax credits toward the purchase of qualified health plans (QHPs) sold on the exchanges. It also notes regulations will be promulgated by the IRS and the U.S. Department of Health and Human Services formalizing the guidance.

The Departments believe that plans that fail to provide substantial coverage for in-patient hospitalization services or for physician services (or for both) (referred to in this notice as Non-Hospital/Non-Physician Services Plans) do not provide the minimum value intended by the minimum value requirement and will shortly propose regulations to this effect with a view to being in a position to finalize such regulations during 2015 and make them applicable upon finalization. Accordingly, employers should consider the consequences of the inability to rely solely on the MV Calculator (or any actuarial certification or valuation) to demonstrate that a Non-Hospital/Non-Physician Services Plan provides minimum value for any portion of any taxable year ending on or after January 1, 2015, that follows finalization of such regulations.

While large employers are subject to a penalty for each employee who uses advance tax credits to purchase an exchange QHP, the guidance waives the penalty if a large employer began enrolling employees in a group plan that does not offer hospitalization coverage prior to the November 4, 2014 date of the guidance and who relied on the MV calculator to determine if their plans provided minimum actuarial value. The guidance adds that the regulations, when issued, will not apply to plans that were effective prior to March 1, 2015.

Under the guidance, employers offering plans without hospitalization coverage must correct notifications issued to employees that such plans preclude employees from obtaining premium tax credits for the purchase of exchange QHPs.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

The next IT challenge for the health benefit exchange marketplace

In addition to the grueling IT challenge state health benefit exchanges have faced processing the initial surge of enrollments for 2014 coverage for individuals and small employers, their next IT test will be how well they serve as agents of the federal Internal Revenue Service.

The exchanges provide a critical tax reporting and monitoring function for the IRS, reporting small employer contributions to exchange qualified health plans (QHPs) offered their workers and advance income tax credits to subsidize QHPs purchased by individuals. The exchanges also track and report changes in monthly income of households purchasing tax-subsidized QHPs. Finally, the exchanges are charged with processing requests under the various exemption categories specified in the Affordable Care Act that allow individuals to avoid tax penalties for not having health coverage starting in 2014 or to qualify to purchase catastrophic plans.

The key test will be how well the exchanges work on an ongoing basis to obtain and process taxpayer reported data and interface with IRS data obtained through the federal data services hub that serves both federally operated and state-based exchanges. How proficiently and accurately the exchanges execute that function isn’t likely to be fully known until early 2015 when individuals and small businesses file their 2014 tax returns. That’s also when individuals must reconcile amounts they received as advance tax credits reported by the exchanges to purchase exchange-based plans with their actual earnings.

Presumably performing this critical tax function will be easier in the nearly three dozen states where the federal government is operating the exchanges. But with the IT snags in the enrollment process, there can be no guarantees it will go smoothly.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

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