Are You Covered?
Beginning in 2014, the Affordable Care Act (ACA) requires most people in the United States to have a qualified health plan in-force or pay a penalty on their taxes due April 15, 2015.
The penalty for failing to comply with the Individual Shared Responsibility Provision increases over the next few years. This year, the adult penalty is $95 or 1% of household income, whichever is greater. By 2016, it increases to $695 or 2.5% of household income. Each child under age 18 is assessed a penalty of half the adult rate. The maximum payment will rise no higher than the average cost paid by a family of five for a bronze level ACA plan.
The ACA provision does come with some exemptions, including those people who belong to certain religious groups or those who will be without insurance for three months or less. Also, members of Indian tribes, illegal immigrants, and prisoners may be exempt. In addition, those covered by Medicare are not subject to the provision.
In order to ensure compliance, by 2016 insurers and employers will be required to provide information to the Internal Revenue Service regarding covered employees. Those files will be matched against individual returns for the 2015 tax year.
The bottom line? Be informed, stay compliant. Make sure you are aware of the provisions affecting you and your family. Contact your benefit consultant with questions and concerns, so you’re not facing a tax penalty in the near future.