The tax team at LSL CPAs examines the impact of the Patient Protection and Affordable Care Act of 2010 and the Health Care and Education Reconciliation Act on 2014 individual income tax returns.
In 2014, individuals must satisfy the individual shared responsibility provision by enrolling in minimum essential coverage, qualifying for an exemption, or making a shared responsibility payment that means paying a penalty.
Minimum Essential Coverage
Minimum essential coverage for an individual is defined as:
- Employer sponsored coverage
- Government Sponsored Programs like Medicare Part A, Medicaid, various veterans’ health coverage, and others
- Plans in the individual market, i.e. the state exchanges
The shared responsible payment, otherwise known as a penalty, is calculated on a monthly basis and is assessed for any month you or your family do not have adequate health coverage. As long as there is coverage for at least one day in a given month, then you and your family are considered to be covered for the entire month.
The calculations for the shared responsibility payments are complex. We will outline them for you, but please make these calculations with the support of a tax professional.
Shared Responsibility Payment
Shared responsibility payment is the lesser of:
- Sum of the monthly penalty amounts; or
- Sum of the monthly national average bronze plan premiums. For 2014, it’s $204 per individual capped at 5 individuals per family. Maximum penalty for a family of 5 is $12,240 in 2014
LSL CPAs understands the challenges of processing this information for most American taxpayers. To learn more about ACA’s impact on individual income taxes, please contact LSL CPAs by calling at (714) 569-1000.
By John Huckabay, CPA
