INDIVIDUAL SHARED RESPONSIBILITY, PROVISION & PREMIUM TAX CREDIT SESSION TWO: 11AM-12:30PM

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1 INDIVIDUAL SHARED RESPONSIBILITY, PROVISION & PREMIUM TAX CREDIT SESSION TWO: 11AM-12:30PM Outreach & Enrollment Track Kentucky Primary Care Association Annual Conference 2015

2 Reporting Health Insurance Coverage for Individuals and Families: Individual Shared Responsibility Provision Internal Revenue Service Revised August 21, 2015

3 The information contained in this presentation is current as of August 21, 2015: Visit IRS.gov for tax forms and instructions For the latest information about tax provisions of the Affordable Care Act, visit IRS.gov/ACA. 3

4 Individual Shared Responsibility Report Health Care Coverage Claim Exemption from Coverage Make Shared Responsibility Payment 4

5 Reporting Coverage ü Check box and leave entry space blank if everyone on the return had coverage for the full year 5

6 Minimum Essential Coverage MEC coverage is: Offered by an employer, COBRA and retiree coverage Purchased through private insurance or Health Insurance Marketplace Provided by government-sponsored programs, including veteran s coverage, most Medicare and Medicaid 6

7 Information Statements Marketplace - Form 1095-A, Health Insurance Marketplace Statement Insurers - Form 1095-B, Health Coverage Large Employers Form 1095-C, Employer- Provided Health Insurance Coverage and Offer 7

8 Form 1095-A 8

9 Form 1095-B 9

10 Form 1095-C 10

11 Form 8965 Health Coverage Exemptions Submit Form 8965 with federal tax return to claim coverage exemptions granted by either the Health Insurance Marketplace or IRS 11

12 Coverage Exemptions Coverage Exemptions only available at filing Coverage Exemptions only available through the Marketplace Coverage Exemptions from Marketplace or IRS 12

13 Making an Individual Shared Responsibility Payment Taxpayers calculate SRP if everyone on the return does not have: MEC for every month of the year, or Exemption for months without MEC 13

14 How is the 2015 Payment Calculated? For the year, based on the greater of the calculated: percentage of income (2%) or flat dollar amount ($325 per adult) Limited to maximum of $975 per household Prorated for months without coverage/exemption Cannot exceed the national average premium for bronze level health plans 14

15 Return Preparer Interview Best Practices Use Form 1095-A, B or C to verify coverage months and who is covered Determine eligibility for exemption Marketplace ECN Income below return filing threshold or IRS coverage exemptions 15

16 Common Errors Eligible for coverage exemption but did not claim Income below filing threshold Not lawfully present Coverage gaps Miscalculated SRP SRP on dependent returns 16

17 2015: What You Need to Know Forms 1095-A, B and C Apply for Marketplace exemptions early ISRP amounts increase 2016 Marketplace enrollment Nov 1, 2015 to January 31, 2016 Special Enrollment Periods 17

18 Resources IRS.gov/TaxPros IRS.gov/DraftForms IRS.gov/Form8965 (links to Form and its instructions) 18

19 ABC s of the Premium Tax Credit Internal Revenue Service Revised August 21, 2015

20 The information contained in this presentation is current as of August 21, 2015: Visit IRS.gov for tax forms and instructions For the latest information about tax provisions of the Affordable Care Act, visit IRS.gov/ACA. 20

21 Agenda Background Basics of the premium tax credit Eligibility How to file Reconciling advance payments Common errors Resources 21

22 Health Insurance Marketplace Provides information at HealthCare.gov or state Marketplace website Enrolls individuals in health coverage Offers financial assistance Issues Form 1095-A, Health Insurance Marketplace Statement 22

23 Basics of the PTC Refundable tax credit Must buy Marketplace coverage Must file Form 8962 to claim the PTC and reconcile any advance payments 23

24 PTC Eligibility Must meet all of the following requirements: Income between % of Federal Poverty Line Taxpayer, spouse, or dependent must enroll in Marketplace coverage for a month that the enrollee is not eligible for coverage through employer or government plan Cannot be claimed as a dependent by another person Not file as Married Filing Separately Note: Some exceptions apply 24

25 2015 Income Limits are based on 2014 FPL One Individual: $11,670 (100% FPL) - $46,680 (400% FPL) Family of Two: $15,730 (100% FPL) - $62,920 (400% FPL) Family of Four: $23,850 (100% FPL) - $95,400 (400% FPL) 25

26 Advance Payments of PTC (APTC) Determined by Marketplace based on estimated household income and family size Paid directly to insurance company on the taxpayer s behalf MUST file tax return to reconcile 26

27 Reporting Changes in Circumstances Examples: Family size or filing status (family = personal exemptions) Increase/decrease in household income Gain/loss of health care coverage or eligibility Moving to another address Important: Report changes to the Marketplace when they happen 27

28 How to claim the PTC Based on actual annual household income and family size reported on the tax return Claimed on tax return using Form 8962 Reconciles APTC Results in either a refundable credit or repayment of excess advance payments 28

29 Forms needed to claim PTC Form 1095-A from Marketplace Form 8962 to claim and reconcile PTC/APTC File Form 8962 with 1040, 1040A or 1040NR 29

30 Form 1095-A, Health Insurance Marketplace Statement Issued by the Marketplace Must be used to complete Form 8962 Reports monthly household coverage information: Plan premium Applicable second lowest cost silver plan premium APTC 30

Form 8962 - Premium Tax Credit File Form 8962 with tax

31 Form Premium Tax Credit File Form 8962 with tax return to : claim the premium tax credit and reconcile APTC 31

32 Completing Part 1 of Form

33 Completing Part 2 of Form

34 Completing Part 3 of Form

35 Part 4&5 of Form

36 Return Preparer Interview Best Practices Did your client receive Form 1095-A from Marketplace? APTC Verify coverage months and who is covered Multiple policies issued Were there changes in circumstances during the year? Married/divorced Eligible for government or employer sponsored coverage Months without coverage 36

37 2014 Filing Season Recap Reconciling APTC Penalty relief for 2014 Reporting changes in circumstances Corrected Forms 1095-A 37

38 Common Errors Claimed PTC but failed to attach Form 8962 Did not reconcile APTC Form 8962, Part 2, Lines 11 or (Column F) Form 1095-A data not correctly reported Form 8962, Part 2, Lines 11 or (Columns A and B) Transposed digits 38

39 Common Errors Miscalculated Monthly PTC Allowed Form 8962, Part 2, Lines 11 or (Column E) Miscalculated Repayment Amount of Excess APTC Form 8962, Part 3, Lines 28 & 29 39

40 2015: What You Need to Know Forms 1095-A and 8962 Report changes in circumstance to the Marketplace if receiving APTC 2016 Marketplace enrollment Nov 1, 2015 to January 31, 2016 Special Enrollment Periods 40

41 Resources IRS.gov/TaxPros IRS.gov/DraftForms Publication 974 Premium Tax Credit Instructions and Form 8962, Premium Tax Credit 41

The Health Care Law and Taxes for Individuals and Families

The Health Care Law and Taxes for Individuals and Families Individual Shared Responsibility Provision Report Health Care Coverage Claim Exemption from Coverage Make Shared Responsibility Payment Reporting