Internal Revenue Service
Posted on December 3, 2013
A report released this morning by the Treasury Inspector General for Tax Administration (TIGTA) found that the Internal Revenue Service (IRS) should “strengthen systems development controls” for the issuance of tax credits under the Affordable Care Act (ACA). Subsidies to help qualifying Americans purchase health insurance will be issued and monitored by the IRS. In the report, Affordable Care Act: Improvements Are Needed to Strengthen Systems Development Controls for the Premium Tax Credit Project, TIGTA stated that the agency needs to improve the software and update the systems used to detect fraud and ensure security of consumer information.
Posted on November 29, 2013
The Internal Revenue Service (IRS) published two final rules concerning the implementation of the Affordable Care Act (ACA). The first rule outlines the health insurance provider fees firms in the insurance industry are expected to provide annually, beginning in 2014. These fees are anticipated to raise nearly $60 billion in revenue over the next several years, most of which will be used as subsidies for qualifying individuals to purchase insurance through health insurance marketplaces. The fee applies to insurance companies with annual revenues exceeding $25 million. Nonprofit insurers receiving more than 80% of their funds from the government, self-insured corporations, and government entities are all excluded from the fee.
The second rule addresses the Additional Medicare Tax provision of the ACA, which requires an additional hospital insurance tax on individuals with incomes above the specified threshold. The rule concerns the implementation and integration of the Additional Medicare Tax, specifically highlighting certain wages and compensation to which the tax does not apply, filing a tax return, and employer processes for adjusting payments and filing claims under the Additional Medicare Tax.
Posted on September 27, 2013
A report issued this week by the Treasury Inspector General for Tax Administration (TIGTA) said the Internal Revenue Service (IRS) could improve their accounting of costs associated with implementing the Affordable Care Act (ACA). The IRS used the Health Insurance Reform Implementation Fund for ACA spending during fiscal years 2010-2012. Now, the agency’s costs associated with implementing the ACA will be directly from the IRS operating budget. As a result, TIGTA recommended that IRS take steps to address potential errors in direct labor costs associated with ACA implementation, document direct labor costs, and update the methodology used to report ACA costs.
Posted on September 16, 2013
New guidance released by the Internal Revenue Service (IRS) explains Affordable Care Act (ACA) market interactions on health reimbursement arrangements (HRA), flexible savings accounts (FSA), and other employer-related options. The guidance states that group health plans used to purchase coverage on the Marketplaces, such as HRA and FSA, will not be considered as integrated for the purposes of determining annual dollar limits or preventive service requirements. Moreover, the IRS guidance states that employers not offering insurance coverage may try to use “excepted only benefits” HRA plans to count toward employee compensation.
Posted on September 5, 2013
The Internal Revenue Service (IRS) released two proposed rules concerning employer coverage requirements under the Affordable Care Act (ACA). The first rule addresses reporting requirements employers must satisfy in order to be deemed compliant with the ACA. Businesses with more than 50 full-time equivalent employees must offer affordable insurance, statutorily defined as less than 9.5% of the employee’s income. This provision of the ACA was delayed until 2015, but the IRS is encouraging employers to comply in the interim.
The second proposed rule described the method by which employers offering minimum essential coverage will report the type and period of coverage they offer to their employees. The IRS will use this provided information to determine if the employer has satisfied the coverage requirements under the law.
Posted on August 27, 2013
A final rule released by the Internal Revenue Service (IRS) explains the individual shared responsibility payment for not obtaining basic insurance coverage, or minimum essential coverage, under the Affordable Care Act (ACA). By 2014, most Americans are expected to possess minimum essential coverage or face a tax penalty under Section 5000A of the Internal Revenue Code. Individuals without minimum essential coverage will pay an annual fine of $95 in 2014, $325 or 2% of their income in 2015, and $695 or 2.5% of their income in 2016 and beyond. Since many Americans will be exempt from this provision for a multitude of reasons (hardship, unaffordability, religious beliefs, etc.), the Congressional Budget Office (CBO) estimates that only 2% of Americans will face the penalty.
In addition to the final rule, the IRS released a fact sheet that highlights several of the key points addressed in the rule. The fact sheet discusses how the rule clarifies hardship exemptions and partial month coverage (i.e. an individual has maintained minimum essential coverage as long as he or she has coverage for at least one day of the month). Specific coverage categories to which minimum essential coverage provisions apply are enumerated, and the processes for obtaining an exemption are also described.
Posted on August 23, 2013
In a new proposed rule released today, the Internal Revenue Service (IRS) outlined stipulations for small businesses to receive tax credits under the Affordable Care Act (ACA). The rule states that small businesses will only be eligible for a tax credit if they have 25 or fewer full-time employees receiving health insurance through the small business health options program (SHOP) Exchanges. Under the ACA, SHOP Exchanges comprise the small group market in which small businesses are able to enroll their employees to receive health benefits coverage.
Posted on August 19, 2013
On August 15th, the Internal Revenue Service (IRS) launched a website explaining the various tax components of the Affordable Care Act (ACA). The homepage of the website is divided into three sections, each tailored to a specific entity impacted by the ACA tax provisions. Some of the featured topics on the website include: premium tax credits on the individual market, new responsibilities for employers, and tax provisions for insurers, tax-exempt organizations, and other businesses. IRS also published a list of other ACA resources to assist individuals on issues not addressed on the website.
Posted on August 15, 2013
In a rule released yesterday, the Internal Revenue Service (IRS) outlined the timeline expected for non-profit hospitals to complete their community health needs assessment (CHNA) requirements under the Affordable Care Act (ACA). If a non-profit hospital fails to satisfy the CHNA, then the hospital will be responsible for completing a tax form 4270 and paying a fine of $50,000 by May 15th of the following year in which the tax occurred. As described in the ACA 501(3), non-profit hospitals are expected to complete a CHNA every three years, meaning that if a non-profit hospital did not complete a CHNA by December 2013, and did not perform one in 2011 or 2012, the hospital must pay the fee and fill out the form by May 15th, 2014.
Posted on August 14, 2013
In a final rule issued yesterday, the Internal Revenue Service (IRS) states that the amount of social security an individual receives will be shared with the US Department of Health and Human Services (HHS) in order to help discern the individual’s eligibility for premium tax credits under the Affordable Care Act (ACA). The information provided to HHS will aid in verifying the applicant’s income, as well as whether or not the applicant would qualify for Medicaid, Children’s Health Insurance Program (CHIP), or other federal health programs. Information collected from the IRS that will be shared with HHS pursuant to this rule include the applicant’s identifying tax information, filing status, the number of individuals permitted a personal exemption deduction, the applicant’s modified adjusted gross income (MAGI), and the taxable year to which any of the information relates.