In our previous blog, we reviewed the 2013 tax changes due to the Patient Protection and Affordable Care Act or in other words Obamacare. This blogs reviews the 2014 and 2018 tax changes.
2014 Tax Changes
A penalty will be imposed on taxpayers without health insurance
There will be a penalty imposed on taxpayers that do not have health care coverage. The penalty is the greater of a specified percentage of income or a dollar amount. The income percentage is 1% in 2014, 2% in 2015, and 2.5% in 2016. The dollar amount is $95 in 2014, $325 in 2015, and $695 in 2016. There are a few exceptions to this penalty.
Qualified employers will be able to offer health plans through the health insurance exchange
Under the qualified employer’s cafeteria plan, the employer can offer health insurance through the health insurance exchange. Click here for the definition of the health insurance exchange.
Health insurance companies will pay an excise tax
A flat fee of $8 billion in 2014 will be allocated to health insurance companies based on the companies market share of health care premiums. This does not effect health insurance companies with net premiums below $25 million.
Employers not offering health insurance coverage will pay a penalty
This will impact companies with 50 or more employees and do not offer those employees affordable health insurance. Click here for flowchart illustration on how the penalty is determined.
New tax credit for families buying health insurance through the exchange
Low-income families may be eligible to get a refundable credit called the premium assistance credit. The premium assistance credit is for the cost of health insurance obtained through the health insurance exchange. The credit will be paid directly to the insurance carrier on behalf of the family. The family will pay the difference between the total premium cost and the tax credit.
2018 Tax Changes
Excise tax on “Cadillac” health insurance plans
Insurance companies will be taxed 40% on annual premiums that exceed $10,200 for single coverage and $27,500 for family coverage. This tax is non-deductible. There is an additional threshold amount of $1,650 for single coverage and $3,450 for family coverage for individuals older than 55.
This is a summary of the tax changes for 2014 and 2018 due to the Patient Protection and Affordable Care Act.
If you have any questions give us a call, ALG Tax Solutions 855-MI-Tax-Help (855-648-2943) or provide your contact information online.
IRS Circular 230 Disclosure: To the extent this writing contains advice on a federal tax issue, the advice is not intended to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed in this communication.