January 21, 2015
Almost everyone who purchased health insurance in 2014 through a Health Benefit Exchange will need help with preparing income tax returns due in April, 2015.
In addition, people who chose not to obtain insurance will need help with establishing exemptions or paying penalties.
IRS Form 1040 for 2014 has a new question (at line 61) as to health insurance status during the past year.
If the person filing the return (and any spouse and dependents) had “minimum essential coverage” for every month last year, a box may be checked.
This will apply to many individuals and families covered through employment or individual insurance purchased outside of an Exchange (with no subsidy), and to those on Medicare or Medicaid.
Otherwise, this box may not be checked.
Everyone who purchased health insurance through an Exchange is supposed to receive a new IRS Form 1095-A that provides information that is needed to file.
Copies of this form have also been sent by the Exchanges to the IRS, for comparison purposes.
New IRS Form 8962 is to be used to reconcile the subsidies that were received during 2014 with those that should have been received, according to program rules.
Form 8962 must be filed with Form 1040 by everyone who received a subsidy.
For those who wish to establish an exemption from the penalty for not having insurance, new IRS Form 8965 must be completed and filed.
The instructions for Form 8965 include a large chart that defines the exemptions, and indicates whether the exemption was to be granted by the Exchange or claimed on the Form.
Definitions of “minimum essential coverage” and a variety of work sheets are also included in these instructions.
These forms and instructions are where many complex features of the Exchanges and the ACA are brought together.
It is all quite complicated and most people will require assistance.
Many individuals will turn to tax preparers. However, some will likely prefer attorney assistance.
Attorneys who are likely to provide such assistance would do well to download and review all forms that may need to be prepared, with associated instructions.
Also, a review of these materials will help attorneys advise clients about the ACA as part of general planning for estate management and preparation of legal documents.
For more background information, refer to two practice-oriented books on the Affordable Care Act and the Health Care System that are available from Thomson Reuters. To find out more about these volumes, and to also be directed to a series of blog postings on implementation of the ACA, refer to the web page at www.legalpracticehome.com.