VITA/TCE Basic Certification Topics on Affordable Care Act

Transcription

1 VITA/TCE Basic Certification Topics on Affordable Care Act

2 What does the ACA require? 2 or or Coverage Exemption SRP

3 Everyone has a Shared Responsibility Individuals Purchase coverage, - Claim an exemption, or - Pay Shared Responsibility Payment Account for premium tax credit Employers Large employers: provide coverage, and Small employers: incentives to provide coverage Government Expand Medicaid (at state option) Make premium tax credits available Build Marketplace(s) 3 Portland, OR Metro TY2016

4 What is Health Care Coverage? 4 Minimum Essential Coverage **One day of coverage = a covered month** Employer-Sponsored Coverage Group coverage COBRA coverage Retiree coverage Individual Market Coverage Purchased through the Marketplace, an insurance company, or as a student health plan Government-Sponsored Programs Medicare Most Medicaid CHIP Most TRICARE DoD Nonappropriated Fund Health Benefits Program Peace Corps coverage Certain Other Coverage Pub 1040, Tab H-5

5 Who is NOT required to have health coverage? 5 1. Anyone with an ITIN number who lives here and is undocumented 2. Anyone with an ITIN living outside of the US (i.e. spouses/dependents in Mexico) 3. Anyone with an SSN obtained through the DACA program (aka Deferred Action - Dream Act Dreamers ) So probably about at least 60% of our clients!

6 Interview & Intake Form 13614C Review & complete ACA Sections, check the boxes, & MEC area Make notes where needed Rely on Taxpayer s good faith; no need for proof How do I verify that a person was covered? Taxpayers may have evidence of coverage (e.g. insurance card or Form 1095). Taxpayers are responsible for accuracy of information reported on the return (e.g. return signed under penalty of perjury). 6 Portland, OR Metro TY2016

7 Interview & Intake Form 13614C Preparer and Reviewer notations sample: 7 Portland, OR Metro TY2016

8 Forms 1095-A/B/C 8 Form 1095-A Form 1095-A Issued by the Marketplace to people who enrolled in Marketplace coverage. Necessary to prepare Form 8962, which is required for people who received Advance Premium Tax Credits Corrections? Call the Marketplace that issued the form Form 1095-B Form 1095-B Issued by Medicaid, Medicare, insurers, and others who offer coverage. Individuals with coverage should receive this form. Useful in determining the months a person had coverage. Form 1095-C Form 1095-C Issued only by large employers (employers with 50 or more full-time EEs) Useful in determining the months a person had coverage or an offer of coverage and the cost of the offer of coverage. (May be helpful to calculate the affordability exemption.) Serves a dual purpose in (1) confirming that a taxpayer had coverage and (2) helping IRS determine whether an employer owes a shared responsibility payment for failure to offer affordable coverage.

9 Form 1095-A Those with Marketplace coverage 9

10 Form 1095-B Anyone with OHP 10 One of these sections will be completed Each covered family member will be listed Either the SSN or date of birth will be listed (no need to validate its accuracy) Full year/months covered

11 Form 1095-C Employer health insurance coverage 11 Cost of an offer of coverage Can be used to determine whether the employee is eligible for an affordability exemption if they did not accept coverage Each covered family member will be listed Either the SSN or date of birth will be listed (no need to validate its accuracy) Full year/months covered

12 Months Insured are Reported in TaxSlayer 12

13 Shared Responsibility Payment (SRP) 13 Everyone in a household must have minimum essential coverage or an exemption from the coverage requirement If they do not, they owe an individual shared responsibility payment, or penalty, for every month they are uninsured The flat amount increases each year by a cost-of-living adjustment

14 Example: John 14 Calculating the Penalty Income: $17,000 Filing Status: Single Adults: 1 Children: 0 Months uninsured: 7 Tax filing threshold in 2018: $12, $17,000 - $10,350 = 2. $695 x 1 adult = $6,600 x 2.5% $165/12 = $14 $695/12 = $58 $58 x 7 $406 John s penalty for 2018

15 EXEMPTIONS

16 Exemptions from the Coverage Requirement 16 ACA Exemption: A qualifying reason for not having health coverage in order to avoid paying a penalty Household Exemption on the Tax Return: If household or gross income is below filing threshold. Individual Exemptions on the Tax Return: Claimed directly on the tax form with no supporting documentation.

17 In TaxSlayer 17 TaxSlayer will automatically determine eligibility for the household and gross income exemption!

18 Other Exemptions 18 IRS Individual Exemptions: Can be claimed monthly or for entire year A person can be eligible for multiple exemptions during the year, If a person is eligible for exemption for one day of the month, they can claim it for the entire month (i.e. ITIN SSN Code C for month unless legal status started on 1 st )

19 Full Exemption List 19 Coverage Exemption Insurance is considered unaffordable Lowest premium would have cost more than 8.05% of household income Short coverage gap Uninsured for less than 3 consecutive months Citizens living abroad and certain noncitizens Includes people who are not lawfully present (ITINs!) Incarceration Aggregate self-only coverage is considered unaffordable Total cost of two or more family members aggregate self-only coverage is more than 8.05% of household income Hardships formerly granted only by Marketplace Member of the tax household born or adopted or died during the year Code A B C F G G H

20 IRS Exemptions: Short Coverage Gap 20 Short coverage gap Uninsured for less than 3 consecutive months B A coverage gap of less than 3 months (so, 1 or 2 months). If the coverage gap is 3 months or longer, none of the months in the gap qualify for exemption. Apply to the first gap in coverage. Example: If Bob is uninsured January 1 to March 31, the exemption does not apply to any of those months because the gap is not less than 3 months. Months covered by another exemption are treated like months with coverage. Example: Bob has coverage January to March, is uninsured in April and May, and is eligible for the affordability exemption June to December. Even though Bob was uninsured April to December, he is eligible for a short gap exemption for April and May. There is a look-back. Consecutive uninsured months at the end of 2017 count toward a gap at the start of 2018; uninsured months in 2019 do not. Example: If Bob is uninsured Dec 2017, Jan and Feb 2018, he doesn t qualify for this exemption in 2018 because the gap is not less than 3 months.

21 IRS Exemptions: Certain Noncitizens Code C 21 Citizens living abroad and certain noncitizens Includes people who are not lawfully present C This exemption applies to: Individuals who are not U.S. citizens, nationals or lawfully present (i.e., undocumented immigrants) Some other citizens living outside of the U.S., residents of territories, and 1040NR (or 1040NR-EZ) filers. Does everyone with an ITIN get this exemption? Those EPHC sees with ITINs: YES! If the person has an ITIN because they are undocumented or because they live outside of the US then they qualify for Code C. Some people with SSNs are eligible, too. Example: A lawful social security number but not an eligible immigration status. E.g., a person who is a Deferred Action for Childhood Arrivals (DACA) grantee ( Dreamer ) can claim the exemption, despite having an SSN.

22 New General Hardship Exemptions* (Code G) 22 Did any of the following hardships prevent you from obtaining coverage? You were homeless Financial Hardship You were evicted or face eviction or foreclosure You received a utility shut-off notice You filed for bankruptcy You had medical debt in the last 24 months You had unexpected increases in expenses caring for ill, disabled or aging relative You were determined ineligible for Medicaid in a state that did not expand Medicaid coverage You were without coverage while awaiting a decision on a marketplace appeal Plan Choice Hardship You lived in a county with only one issuer offering coverage and can show that the lack of choice precluded enrollment** All affordable plans provide abortion coverage contrary to your beliefs** You experienced a personal circumstance that created a hardship, such as when no affordable plans provide access to needed specialty care** Personal Hardship You experienced a disaster that resulted in significant property damage You experienced domestic violence A close family member died Your child was denied Medicaid or CHIP and another person is required by court order to provide coverage for the child You experienced another hardship that prevented you from obtaining coverage *Most of these exemptions were formerly claimed by submitting a marketplace application. The exemption is valid for the month(s) of the hardship and the month before and after. **New hardships Burden of proof: No specific proof is needed but it s always advisable to keep something in the taxpayer s record

23 Exemptions in order of ease: 23 When looking for an exemption let s always go in order of ease! 1. Household income (Automatic in TaxSlayer) 2. Code C (ITIN/DACA SSN holders) 3. Code H (Born/died in tax year) 4. Code B (Short coverage Gap) 5. Marketplace exemption 6. Code A (coverage is unaffordable according to formula) Let s make it as quick and painless on ourselves as possible!

24 In TaxSlayer 24 Exemption Code letters do not appear on drop down menu but options are still listed in order (Code A, B, C, etc)

25 Exemption? Pietro lived in the U.S. the whole year but did not get his lawful status until June 15, 2018; his MEC started in July Is Pietro eligible for an exemption? Answer: Pietro can claim the not-lawfully present exemption (Code C) for January through June 25 Portland, OR Metro TY2016

26 Exemption? Daniela lived in the U.S. the whole year has a work permit through DACA. She did not have healthcare coverage at all during the year. Is Daniela eligible for an exemption? Answer: Daniela can claim the not-lawfully present exemption (Code C) for the entire year because her work permit is through DACA 26 Portland, OR Metro TY2016

27 Exemption? Greta lived in the U.S. the whole year but did not get her lawful status until June 15, 2018; her MEC started in August Is Greta eligible for an exemption? Answer: Greta can claim the not-lawfully present Code C exemption for January through June and she can claim the short gap exemption Code B for July 27 Portland, OR Metro TY2016

28 IRS Exemptions: Born, Adopted or Died 28 Member of the tax household born or adopted or died during the year H The coverage requirement applies for full months alive or post-adoption. This exemption covers the other months of the year, when coverage is not required (e.g. before birth/adoption or after death). Example: A person dies May 14. Coverage is required January April. The exemption can be used May December. Tip: If the entire tax family had coverage all year, you can still consider the born, died or adopted person to have full-year coverage. In the example above, if everyone else on the return had coverage all year, you can still check the box on Line 61. Leila was born in November and was covered by Medicaid retroactive to the date of birth. Claim Code H for Leila January October.