A project of the George Washington University's Hirsh Health Law and Policy Program and the Robert Wood Johnson Foundation

Tax Policy

IRS issues new ACA-related rules

Posted on March 6, 2014

A final rule released by the Internal Revenue Service (IRS) addresses the reporting requirements for large employers under the Affordable Care Act (ACA). Beginning in 2015, employers with more than 50 full-time employees are required to offer quality and affordable insurance to their employees. The new rule provides a methodology designed to simplify and reduce the costs associated with the employer reporting requirements mandated under the ACA. Another final rule issued by the IRS describes how issuers of minimum essential coverage are expected to report information to the IRS on the type and duration of coverage.

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IRS rule addresses employer mandate, calculating teacher hours

Posted on February 11, 2014

A new rule issued by the Internal Revenue Service (IRS) addresses several components of the employer shared responsibility provisions within the Affordable Care Act (ACA). The rule further delays the employer shared responsibility payment for medium-sized businesses (50-100 employees) until 2016. Large employers will be able to phase in the percentage of full-time employees to whom they must provide health insurance, starting with 70% in 2015 and moving to 95% by 2016. IRS also released a fact sheet to accompany this rule. Additionally, this rule stated that teachers cannot be considered part-time employees because many do not work a full summer schedule.

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HHS releases new FPL guidelines

Posted on January 27, 2014

The US Department of Health and Human Services (HHS) updated the federal poverty level (FPL) guidelines for 2014. The guidelines, which are slightly higher than the 2013 levels, will not impact the eligibility thresholds used to determine subsidy eligibility for health insurance enrollment for 2014. For an individual, the the FPL is now set at $11,670, which represents a 1.6% increase from 2013.

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Update: Proposed IRS Procedures for Tax-Exempt Hospitals to Correct and Disclose Failures to Meet Their Community Benefit Obligations Under the Internal Revenue Code

Posted on January 13, 2014

In order to be exempt from federal income taxes, nonprofit hospitals seeking such a designation under the Internal Revenue Code must provide a community benefit, a policy that has been in place since 1969 but that has gone essentially unenforced since its creation by the Nixon Administration. Government estimates of the value of nonprofit hospital tax-exemption placed the total national value at more than $12 billion in 2002, a figure that undoubtedly has grown over the past decade and that reflects both federal tax losses and losses resulting from the fact that most states and localities use federal law to determine exemption from state and local property, sales, and income taxes…

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IRS rule cuts nonprofit hospitals some slack

Posted on December 31, 2013

A new rule released by the Internal Revenue Service (IRS) states that nonprofit hospitals failing to satisfy many of the new standards under the Affordable Care Act (ACA) will not lose their tax-exempt status, as long as the shortcomings were not “willful” or “egregious.” Under the ACA, nonprofit hospitals are expected to perform Community Health Needs Assessments, and then work towards implementing these findings in their communities. This proposed rule permits a nonprofit hospital failing to meet these and other standards to discuss the situation with the IRS and therefore not immediately lose tax-exempt status.

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IRS rule prohibits grant-funded work to count as community benefit

Posted on December 30, 2013

A draft rule released by the Internal Revenue Service (IRS) states that not-for-profit hospitals are no longer permitted to count local community benefit services funded by grant revenue when reporting these activities for tax exemptions. In order for non-federal hospitals to receive tax exemptions, these hospitals are required to perform and document their community benefit efforts, such as health-education or free healthcare services, on their Schedule H form. Proponents of the rule state that this change will increase transparency in how community benefit activities are funded, as well as level the playing field for teaching and non-teaching hospitals, who sometimes receive disparate amounts of grant funding.

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CBO provides healthcare options to reduce deficit

Posted on December 6, 2013

The Congressional Budget Office (CBO) recently released a report outlining 103 potential options to reduce federal spending or increase tax revenue. The report, Options for Reducing the Deficit: 2014 to 2023, contains 16 health-related provisions, several of which concern the Affordable Care Act (ACA), that may aid in reducing the deficit. These options include:

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TIGTA report warns of tax credit fraud and security

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.

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IRS issues two ACA rules

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.

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CCIIO issues enrollment period FAQs

Posted on October 29, 2013

The Center for Consumer Information and Insurance Oversight (CCIIO), within the Centers for Medicare and Medicaid Services (CMS), published an FAQ concerning the open enrollment period for individuals purchasing qualified health plans (QHPs) under the Affordable Care Act (ACA). The guidance states that individuals will be able to enroll in QHPs throughout the entire enrollment period, which lasts through March 31st, and not be subject to the individual shared responsibility payment. According to the ACA, individuals would have to enroll in a plan by the 15th of each month in order for their QHP coverage to be effective at the start of the following month. Individuals that enrolled in plans after the 15th would not be covered for another two months. The issue pertains to individuals that would enroll in QHPs between February 16th and February 28th of 2014. These individuals would not be covered until April 1st, and would therefore be subject to the minimum essential coverage penalty under the ACA (the minimum essential coverage provision states that an individual must pay a penalty if he or she does not have coverage for more than three consecutive months in a year). This guidance removes that snafu in the law and states that CCIIO will provide additional guidance on the issue in 2014.

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