As taxpayers are completing their 2018 tax returns this year, they must complete the lines related to health care.
For tax year 2018, the IRS will not consider a return complete and accurate if individuals do not do one of the following on their return:
- Report full-year health coverage
- Claim a coverage exemption
- Report and make a shared responsibility payment for everyone on the tax return
The law continues to require taxpayers who do not qualify for an exemption to maintain health care coverage in 2018 or make a shared responsibility payment when they file their tax return.
Most taxpayers have qualifying health coverage or a coverage exemption for all 12 months in the year and will check the box on the front of their tax return. Taxpayers who can check the box don’t have to file Form 8965, Health Coverage Exemptions, to claim any coverage exemptions. This includes the coverage exemption for household income below the filing threshold.
Flexible Spending Account (FSA) allows employees to be reimbursed for medical expenses. FSAs are usually funded through voluntary salary reduction agreements with your employer. The benefits of an FSA are that no employment or federal income taxes are deducted from your contribution. Some employers will even contribute to your FSA account.
Withdrawals may be tax free if you use the funds for qualified medical expenses. You can withdraw funds from the account to pay for qualified medical expenses even if the funds are not yet in the account.
On October 12, an executive order was signed that, among other things, seeks to expand Health Reimbursement Arrangements (HRAs). HRAs are just one type of tax-advantaged account you can provide your employees to help fund their health care expenses. Also available are Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs). Which one should you include in your benefits package? Here’s a look at the similarities and differences:
The drama on what, if anything, to do with the Affordable Care Act (ACA) aka Obamacare continues. There are two very different new proposal in the Senate. The GCHJ proposal might be voted on the week of September 25. We’ll see what happens. I have a description of both the Republican GCHJ proposal and Senator Sanders’ S. 1804, Medicare for all Health Insurance bill below.
Graham-Cassidy-Heller-Johnson (GCHJ) Proposal, introduced on 9/13/17 as an amendment to H.R. 1628, would repeal the ACA and instead offer block grants (run through CHIP) to states. Sponsors claim the proposal treats everyone the same regardless of where they live. Read More
This is the first case I’ve seen dealing with application of the Affordable Care Act (ACA). Yes, we had cases in the U.S. Supreme Court dealing with legality of some of the taxes and mandates, but this July 12, 2017 decision from the U.S. Tax Court gets at application of the advance Premium Tax Credit (APTC). When an eligible person purchases health insurance on the exchange (such as Covered California), and their household income is 400% or less of the federal poverty line, they get a credit that can be applied to the monthly premiums (by having the government send the money directly to the insurance provider) or claimed when filing that year’s income tax return. Read More
The tax law is difficult to understand due to its numerous special rules. This is apparent on just about every news show about the House Republican/President Trump’s bill to replace/repair the Affordable Care Act (aka Obamacare). Last night, I saw a bit of a CNN town hall with HHS Secretary Tom Price. Questions were raised about the bill providing significant benefits to high income/wealthy individuals. In addition to repeal of the Net Investment Income Tax (Section 1411), a comment was made by the CNN reporter about repealing the ACA rule regarding a compensation limit on high compensation of health insurance companies.
The House Republican plan to repeal and replace the Affordable Care Act (aka Obamacare) that was released on March 6 omits something that the House Republican health reform blueprint of June 2016 said would be included. The missing item is a big one, that if modified, would make the tax law more equitable, reduce health care spending, raise revenue (that could be used to help those without insurance), and help a lot of people know what their health insurance costs.
President Obama signed the 21st Century Cures Act into law creating an option for small businesses to offer employees a health reimbursement arrangement (HRA) that is funded by the employer.
Beginning January 1, 2017, the maximum employees can receive per year through the HRA is $4,950 for individuals who show they have individual coverage or up to $10,000 for workers who also have coverage for family members. The contribution cap will be indexed for inflation.
Whatever the result of the Presidential Election 2016, it is apparent that we all love the United States. For the record, many of my closest friends represent all parties in this year’s election and I respect all the views. The question is what direction will this country take on taxes with either candidate?
A Health Savings Account—HSA—allows employees covered by a High Deductible Health Plan (HDHP) to take a deduction for Adjusted Gross Income (AGI) for contributions to an IRA type account to pay for or to be reimbursed for qualified medical expenses. This article will explain the eligibility rules regarding qualified individuals, limits on contributions and withdrawals, treatment of distributions, reporting contributions and distributions on form 1040 and supporting schedules.
The Affordable Care Act requires you and each member of your family to have minimum essential coverage, qualify for an insurance coverage exemption, or make an individual shared responsibility payment for months without coverage or an exemption when you file your federal income tax return.You, your spouse or your dependents may be eligible to claim an exemption Read More
This year, you may receive one or more forms that provide information about your 2015 health coverage; these forms are 1095-A, 1095-B and 1095-C. The IRS does not issue these forms and cannot provide you with a copy of any of these forms.
This tip provides guidance about what you should do if you are expecting to receive any of these forms, but do not have them by the time you are ready to file your tax return.
Form 1095-A, Health Insurance Marketplace Statement, provides you Read More