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Tips for Individuals and Employers on the Affordable Care Act and Tax Season

With less than a week until the healthcare enrollment deadline, and tax season underway, Judith Herron, a CPA with Markovitz-Dugan and Associates in Green Tree explains how the Affordable Care Act will impact filing.

How will the Affordable care Act impact individuals?

  • You'll face a penalty if you do not purchase insurance at all
  • Additional taxes for people with higher incomes
  • Individuals who do not get coverage through their employers may also be eligible for tax credits when they purchase health insurance through the Health insurance Marketplace
  • Individuals must file a tax return to get the credit and it is refundable

Strategies to consider for this year & next year

  • Investigate options for tax advantaged health insurance plans
  • Taxpayers facing the Net Investment Income Tax (NII) should consider regrouping business activities

How does the Affordable care Act impact Businesses this year?

  • Employers with 25 employees who pay at least half of their employee’s health insurance premiums may be eligible for a tax credit of up to 35% of that cost per full time employee.
  • Credit increases to up to 50%, but employers must purchase their insurance through the Small Business Health Options program to qualify
  • Starting in 2015 employers with more than 50 FTEs will be required to offer affordable health coverage that provides a minimum level of coverage to full time employees and their dependents
  • If they fail to comply they will be subject to penalties in 2016, (based on 2015 plan enrollment & employee data) but the payments for those will not be included in any business tax returns.

Strategies for employers to consider

  • Talk through options with your insurance advisor
  • Be clear about the status of your workers in terms of contractor vs. employee
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