The Affordable Care Act and Taxes--What New for 2015
Health Insurance
Employer Mandate: Companies with 100 or more full-time-equivalent employees must offer health coverage to full-time employees or pay a tax/fine. Full-timers are those employed at least 30 hours a week on average, but there is a good chance that this number will be raised. Beginning in 2016, companies with 50 to 99 full-time-equivalent workers will be subject to the pay-or-play rules and the coverage offer will be expanded to dependents, including children under the age of 26.
Fines: One of the fine applies to companies that fail to offer health coverage to at least 70% of full-time workers in 2015, if even one full-timer opts to buy insurance through a government exchange and receives a tax credit to subsidize the premium. For 2015, the fine is $2,084 multiplied by the number of full-timers employed, less 80. In 2016, the penalty is worse. The required coverage of full-time employees increases from 70% to 95%, and 30 full-timers are disregarded when figuring the tax/fine. Another fine imposes a tax equal to $3,126 for each full-timer who receives a credit for purchasing coverage on an exchange for whom the company has not offered affordable coverage. Coverage is considered affordable, if the required premium contribution from an employee for self-only coverage doesn't exceed 9.56% of the worker's wages. In addition, the employer's health plan must also provide "minimum value," meaning that it must pay at least 60% of the costs of covered health services.
Reporting: Beginning in 2016, firms with 50 or more full-time-equivalent employees must report 2015 insurance data for each full-timer to the Service and the worker on Form 1095-C. Reporting for 2014 is voluntary.
Individual's Fine: The tax/fine is typically the greater of two amounts: 1) Basic fine of $325 per person ($162.50 for each family member under 18) with a ceiling of $975; 2) Income-based levy of 2% of the excess of household income over the tax return filing threshold.
Individual's Credit: The credit is available to offset the cost of health insurance only to those with household incomes between 100% and 400% of the federal poverty level: $11,670 to $46,680 for singles and $23,850 to $95,400 for a family of four. Individuals eligible for Medicaid or other federal insurance don't qualify.
