October 23, 2013
The Affordable Care Act was enacted on March 23, 2010. It contains some tax provisions that are currently in effect and others that will be implemented over the next several years. Here is a brief summary of some of the tax related provisions that we will see:
- Flexible spending accounts will have a $2,500 limit on health FSA salary reduction effective 12/31/12 and will be indexed for cost-of-living adjustments beginning 12/31/13.
- Starting in 2012, employers will be reporting the cost of coverage for health plans on W-2's in box 12. The amount reported does not impact tax liability.
- Beginning in 2011, insurance companies were required to spend a specified percentage of premium dollars on medical care and quality improvement, meeting a medical loss ratio (MLR) standard. Insurance companies that are not meeting the MLR standard will be required to provide rebates to their consumers beginning in 2012.
- Starting in 2014, certain employers must offer health coverage to their full-time employees or may be subject to a shared responsibility payment.
- Starting in 2014, individuals and families can take a new premium tax credit to help them afford health insurance coverage purchased through an Affordable Insurance Exchange. The premium tax credit is refundable so taxpayers who have little or no income tax liability can still benefit. The credit also can be paid in advance to a taxpayer's insurance company to help cover the cost of premiums.
- Beginning in 2014 if the coverage offered by your employer fails to provide a minimum value (as defined by the IRS), an employee may also be eligible to receive a premium tax credit.
IRS CIRCULAR 230 NOTICE:
As required by U.S. Treasury Regulations, please be advised that any written tax advice contained in this communication was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.