Module 9: AFFORDABLECARE ACT - ACASpecial thanks to: Jim Yuhas, United Way of Greater Cincinnati , and Chase Crighton, Department of Personal Financial Planning, Texas Tech University for their contributions to this module.

▪The ACA

▪Individual Shared Responsibility Payment

▪Premium Tax Credits

▪Re-Cap

▪Knowledge Check

In this module…

▪Understand the 2 key tax tenets of the ACA

▪Understand the Individual Shared Responsibility Payment

▪Understand most of the exemptions

▪Know what documents are required for tax preparation

▪ Become familiar with issues that are beyond the scope of a Basic Preparer

By the end of this module you will…

At the end of this module, you will be prepared to answer the ACA

questions in the IRS Basic Certification Test.

The ACA

Overview of the key tax aspects

▪ Taxpayers are required to have health insurance, known as Minimum Essential Coverage [MEC], or qualify for an exemption.

▪ Those without MEC or an exemption are required to pay an Individual Shared Responsibility Payment (the penalty) as part of their tax return. Exception: This penalty does not apply to taxpayers who qualify as a dependent of another taxpayer.

▪Some taxpayers who get insurance through the Marketplace may qualify for a Premium Tax Credit.

▪The Individual Shared Responsibility Payment has expired for 2019 returns; but it still applies to 2018 tax returns, it is now a $0 penalty.

The ACA - Overview

▪ Individuals may have health insurance from a variety of places: employer, government (Medicare, Medicaid, etc.), direct purchase, etc.

▪ Those that don’t have MEC from another source, may choose to purchase health insurance from the government Marketplace – an online site offering various medical insurance plans.

▪ Those that do purchase from the Marketplace may further choose to receive an Advanced Premium Tax Credit (a monthly subsidy) for the insurance purchased.

▪ The Premium Tax Credit must be reconciled every year on the person’s tax return.

▪ The operation of the Marketplace is still in effect.

The ACA - Overview

Individual Shared ResponsibilityPayment

▪ Preparers fill in the question of Section V of Form 13614-C “have health coverage through the Marketplace(Exchange)?” (Intake/Interview & Quality Review Sheet) to document who had health insurance.

Individual Shared Responsibility Payment

▪ Employer provided insurance▪ Government plan

▪ Employer provided plan

▪ Retiree coverage

▪ COBRA

▪ Individually obtained insurance▪ Purchased directly from an insurance company

▪ Obtained via the Marketplace

▪ Obtained via a student health plan

▪ Government plans▪ Medicare (Part A)

▪ Medicaid

▪ Children’s Health Insurance Program (CHIP)

▪ Veteran’s Affairs

Minimum Essential CoverageCommonly Seen Types

▪ If a person does not have MEC, the preparer is to review all possible exemptions before the Individual Shared Responsibility Payment is assessed.

▪A summary of all exemptions can be found in Publication 4012, Volunteer Resource Guide.

▪ Some exemptions are straightforward and simple to assess.

▪Others are more complex.

▪ If a taxpayer qualifies for an exemption, prepare Form 8965, Health Coverage Exemptions.

▪ When in doubt, ensure that you seek guidance from your site coordinator or a more experienced preparer.

Exemptions

What is the Premium Tax Credit (PTC)?

▪The premium tax credit is a credit designed to help certain eligible individuals and families with low or moderate income afford health insurance purchased through the Health Insurance Marketplace. (https://www.irs.gov/affordable-care-act/individuals-and-families/the-premium-tax-credit-the-basics)

▪ In essence, it lowers one’s health insurance premiums.

▪The PTC is reconciled on the tax return and may increase or decrease the taxpayer's refund or balance due.

▪The Health Insurance Marketplace is where you can find out information about health insurance, purchase health insurance, and obtain financial help if you are eligible.

The Premium Tax Credit

Key Documents Cont.

Taxpayers who purchased insurance

through the Marketplace will receive a

Form 1095-A. This form is required in

order to complete their tax return.

The PTC is an issue

that requires Advanced level

certification. If anyone on

the tax return purchased health

insurance through the

Marketplace, refer that

taxpayer to a preparer with

Advanced certification.

Re-Cap

▪Determine for every person on the tax return if they either had MEC coverage or an exemption

▪Some exemptions are straightforward to determine

▪Other exemptions may require the guidance of a more experienced preparer

▪Determine if any person on the tax return obtained insurance via the Marketplace

▪ If they did, they must have Form 1095-A to compute the Premium Tax Credit reconciliation.

▪ Only an Advanced preparer can complete a return for a taxpayer who had health insurance purchased through the Marketplace.

Re-Cap

Up Next…Module 10: Finishing the Return

Additional Resources:

Knowledge Check