Key provisions in the health care law enacted in 2010 are going to take effect next year. These changes will affect how you and your family obtain coverage and what you’ll pay for it.
Every person (other than those below the poverty level, incarcerated, not legally in the United States, a member of an Indian tribe, or with a religious objection) must carry health coverage. Parents must have coverage for their dependents up to age 18.
Those who are required to have coverage but fail to maintain the required minimum level of coverage will pay a tax penalty. The penalty for 2014 is the greater of $95 per person (half of this for dependents) or 1% of household income over the threshold for filing federal income tax returns. The penalty rate increases in the coming years.
Note: The penalty for 2014 failures will be reported on 2014 federal income tax returns filed in 2015. The IRS has promised not to use draconian measures to collect the penalty (such as levies and seizures), but it will still be subject to IRS collection as any other tax.
Those with income below set levels (related to the federal poverty level) will be entitled to tax credits to defray the cost of buying coverage. The credit will be offered throughout the year (i.e., applied toward the cost of coverage); the taxpayer will not have to wait to file his or her return in order to receive the credit.
There are other government subsidies to help those whose income prevents them from contributing to the cost of coverage, including coverage through government-run exchanges.
Your child can continue on your health care plan up to the age of 26. This rule applies whether or not your child is your dependent or even lives with you. Starting next year, you child can opt to remain on your plan even if he or she has access to another health plan (e.g., a plan of your child’s employer). All employer plans will be required to be amended to reflect this new rule.
Health plans pay some or all of the cost of certain wellness programs:
One of the main ways that the Affordable Care Act pays for coverage of those who cannot afford it is with a tax on insurers and reinsurers. The tax in 2014 is $63 per person insured, including dependents. While the tax is levied on insurers, as a practical matter it will be paid by those who are insured.
If you have coverage through your employer, likely this tax on the insurance company will be reflected in the premiums you and your employer pay.
While there is much that is new, many rules related to health coverage will remain unchanged. For example, eligibility for Medicare is the same as it has been (although premiums may increase next year due to inflation adjustments). Health savings accounts (HSAs) are still viable health care options (contribution limits for 2014 have been increased). Confused about all the changes? Who isn’t? We’ll continue to bring you developments and clarifications as they arise.
A recent survey shows that many taxpayers fail to take the job-related expenses to which they are entitled. For example, 38% failed to claim moving expenses when they relocated for a job. Half did not know they could deduct travel costs to see clients. And only 23% claimed education expenses to which they were entitled.View all factoids