ACA Impact & Return Pricing

[Lion EA]

As long as the Medicare or large-company health plans covered the required number of months and as long as everyone else on the tax return, including dependents,....  You do have to ask questions.

[SaraEA]

Medicare definitely counts as qualified coverage.  Large-company provided insurance should too. With smaller companies, who knows?  My hunch is their insurance providers wrote them new plans if the old ones weren't qualified.  It won't matter for filing season 2015 (tax year 2014) because the employers and insurance companies were given an extension to report these things until 2015, and the IRS has no way of checking (their admission) if 2014 plans were qualified.

 

People who got insurance through the exchanges or don't have insurance will be the complex ones. The exchanges will provide a form showing how much advance premium credit they got, it any. I went to a seminar this week and everyone breathed a collective sigh of relief when the speaker said all you need to know is household size, household income, and the numbers on the exchange form. The software does it all!  (He uses Ultratax, not sure about ATX.) Household income can be tricky though.  For example, nontaxable Social Security income counts for all household members, including kids who might be getting SS from a deceased parent's account. Hopefully this was all included in the exchange enrollment questions, so there should be no surprises. For those with no insurance, the software will do it all. Unless of course the taxpayer qualified for an exception.  Best to read up on those.

 

That said, we still have to be able to explain it to the client, and that will take education.  (Kind of like explaining why part of a client's SS is taxed--you can't unless you understand the math.) And there will be kinks galore.  I just researched what happens if someone who gets an advance credit gets married. One would think income for the unmarried months would be used to calculate the credit.  Nope. Total household income on the joint return is divided in half, as if each spouse earned half the income during the year. The credit is calculated on that amount.  So if a guy who earned $25k and got a premium credit marries in December to someone who earned $75k, he would be treated as if he had earned $50k and have to pay the whole advance back.

 

These unusual situations should be rare, but if we typically help our clients with tax planning we really need to get educated.

[mcb39]

Sara, your post pretty much covers it and I gave you a "like".  What I didn't like was the suggestion to trust the software to "do the rest".  I firmly believe that is something we should never do with any situation.  It is all well and good if that is true, however we need to know WHY and where the software is going with those numbers.  Otherwise, we are not professional tax preparers.  I have attended two ACA seminars and I WANT to understand it; but have to admit that I don't totally.  Am waiting and hoping for the pieces to fall into place when we reach the "hands on" phase.  One of the hardest things we may have to face this year would be all of the false, misleading, totally untrue and partially untrue stories that are going around out there.

 

Some of the things my clients try to tell me make me doubt myself.  We have to learn this law.  My greatest fear is that we may spend hours agonizing  over and studying a subject that might someday go away or at least change to a great degree.  For that reason, I am keeping a low profile for now.

[JohnH]

_{So I'm still puzzled.} 

_{I completed a return for 1) a retired person on Medicare with taxable retirement earnings, and 2) a single wage earning in their 50's who is covered the entire year by a plan provided by their employer.  In both cases, I just checked that they had full-year coverage and a check box appeared on line 61 of the Form 1040.} 

_{Both returns done and out the door.}

 

_{Furthermore, I don't see how any of this changes in 2015 in any meaningful way.}

_{Yes, the person working for the large company could lose their job or the company might drop coverage.}

_{Aside from that possibility, there isn't anything new or different in 2015 for them.}

_{The retiree isn't going to be dropped from Medicare in 2015.}

 

_{So where is all the complexity and difficulty we spoke of earlier?} 

_{There's absolutely nothing of any difficulty for that subset of taxpayers.} 

_{Or was this just more hyperbole and  hysteria over ACA?}

Edited January 29, 2015 by JohnH

[Jack from Ohio]

_{So I'm still puzzled.} 

_{I completed a return for 1) a retired person on Medicare with taxable retirement earnings, and 2) a single wage earning in their 50's who is covered the entire year by a plan provided by their employer.  In both cases, I just checked that they had full-year coverage and a check box appeared on line 61 of the Form 1040.} 

_{Both returns done and out the door.}

 

_{Furthermore, I don't see how any of this changes in 2015 in any meaningful way.}

_{Yes, the person working for the large company could lose their job or the company might drop coverage.}

_{Aside from that possibility, there isn't anything new or different in 2015 for them.}

_{The retiree isn't going to be dropped from Medicare in 2015.}

 

_{So where is all the complexity and difficulty we spoke of earlier?} 

_{There's absolutely nothing of any difficulty for that subset of taxpayers.} 

_{Or was this just more hyperbole and  hysteria over ACA?}

2015, all insurers will send to all insured form 1095-B.  If the insurance is provided by an employer with more than 100 employees, the employer will send form 1095-C to the employee as well.  Anyone who purchases healthcare from the marketplace will receive form 1095-A. 

 

Penalties triple and thresholds rise.

 

This is NOT hysteria and this information has been available for over 2 years.  There were seminars at the IRS Nationwide Forum in 2013 about these items.  Same for the IRS forums in 2014.

Edited January 29, 2015 by Jack from Ohio

[JohnH]

But for that group of employees who have qualifying healthcare coverage at work, and for those retirees who have medicare coverage & no dependents, it's still just a "check-the-box" answer and move on.

So my question remains unanswered - Where'e the problem with respect to these two very sizable groups of people?

Edited January 29, 2015 by JohnH

[Jack from Ohio]

But for that group of employees who have qualifying healthcare coverage at work, and for those retirees who have medicare coverage & no dependents, it's still just a "check-the-box" answer and move on.

So my question remains unanswered - Where'e the problem with respect to these two very sizable groups of people?

Your observations only apply for tax year 2014. 

[Lion EA]

I expect some employees with employer coverage only for the employee.  So, still have to ask questions for the rest of the family members that might result in a separate form.  And, next year we have to wait for the 1095s for everyone (well, maybe not Medicare users, but they might have SS and thus a piece of paper).

 

Struggling now with a family that used the marketplace, so waiting for 1095-A.  But, marketplace sent her to Husky, which is really Medicaid and does NOT send a 1095.  Except that client swears it's NOT Medicaid and all her mailings say the marketplace, so I'm making her wait until next week to see if she does get a 1095-A from the marketplace.  Then client's mom calls me in tears, because all her daughter's friends got their refunds last Monday.  I can't talk to you, mom.  Daughter/client is 33 years old, by the way!  This is VERY time-consuming, even though this may up as just a check-the-box.

[easytax]

But for that group of employees who have qualifying healthcare coverage at work, and for those retirees who have medicare coverage & no dependents, it's still just a "check-the-box" answer and move on.

So my question remains unanswered - Where'e the problem with respect to these two very sizable groups of people?

For those type clients you are correct for 2014. For later years, there will be (think IRS/government thought patterns) requirements to prove health insurance. Therefore these type clients need educated that additional forms will be required and proof for those that do not receive those forms (think - less than 100 or 50 employee businesses) will be needed for some sort of proof (to be announced - probably at last minute too).

 

ACA for many, is not big deal if you have a handle on what is/is not required and which forms do what for 2014 ---- as long as your clients fall into that segment. However if the client does not have full year health insurance or receives it from the Market Place, then it becomes much more interesting AND MUCH of the HYPE is called for.

 

The two sizeable groups you mention are good for 2014 but can be cumbersome and will shrink going forward to 2015 and beyond.

 

BUT --- remember --- we are STRONG --- that is why we are ---- PRACTITIONERS !   We can handle anything (maybe even 3115's) that the government throws at us.

[kcjenkins]

But for that group of employees who have qualifying healthcare coverage at work, and for those retirees who have medicare coverage & no dependents, it's still just a "check-the-box" answer and move on.

So my question remains unanswered - Where'e the problem with respect to these two very sizable groups of people?

John, for this year, yes, those two groups are simple check the box,  But that's not as big a subset as you make think, given the millions who lost their employee coverage.  And there are going to be lots that got changed from family coverage to just the employee, and may not have had all family members covered all year.  And then there is the issue of those who got subsidies.  The Feds Estimate Up to 6M Households Could Face ACA Penalties. Six Million is not a small number, IMHO.

 

 http://www.californiahealthline.org/articles/2015/1/29/feds-estimate-up-to-6m-households-could-face-aca-penalties

[Gail in Virginia]

I agree that 6 million is not a small number but I tend to agree with John that IN MY PRACTICE it is not going to be a huge number either.  I will have a few that will have to pay the penalty.  I will even have a few that will have incomes low enough that they don't have to pay the penalty even though they don't have insurance.  But by and large, my clients have insurance.  They have assets to protect, so they are going to do what is necessary to protect those assets by having insurance.  And even though next year they will have to bring me in an extra form, whether from their employer, insurance company or the market place, they will do it because I am sure that it will come in an envelope marked "important tax information" and therefore they think they know to bring it in.  Yes, it is one more thing I have to be sure is covered, but it is not going to be that big a deal.  I am far more concerned with trying to figure out the repair regulations and when I need an election or have a change in accounting method (is from none to some a change in method?)  But depending on the type of practice you have, your mileage may vary.

[Lion EA]

My clientele sounds a lot like Gail's.  However, I do a freebie for a family friend.  I've spent a month with her (and with her mother in tears saying all her 33-year-old daughter's friends have their refunds) and AccessHealthCT and Husky to see if she's going to receive Form 1095-A or not.  AccessHealthCT is mailing forms, but Medicaid via Husky is not, but client says her family is not on Medicaid.  Very time consuming.  I could not charge enough for this.  And, as Gail says, I should be reviewing biz clients records and preparing 3115s now.  People are starting to drop off even though they haven't received brokerage statements.  Lots of phone calls.  I let more and more go to voice mail.  I'm running to catch up this season.

[HV Ken]

Our first 3 clients, we had two with no health insurance and one who had a job, was covered, lost it, unemployed for a few months, got another job without it, etc.  Mother is custodial parent but kid is on father's plan.  Marriage during the year.  Divorce during the year.  The permutations and combinations go on and on....