Affordable Care Act

What do I need to know?

Premium Tax Credit
If you get insurance coverage through the Health Insurance Marketplace, and not another source like your employer or a government sponsored plan, you may be eligible for a Premium Tax Credit to help you pay for that coverage.

There are two ways to get the credit. If you qualify for advance payments of the premium tax credit (APTC), you can choose to have amounts paid directly to the insurance provider to help cover your monthly premiums. You can also choose to get all of the benefit when you claim the PTC on your tax return.

Premium Tax Credit Change Estimator
Helps you estimate how your premium tax credit will change if your income or family size changes during the year.

Individual Shared Responsibility Provision

Under the Tax Cuts and Jobs Act, passed December 22, 2017, the amount of the individual shared responsibility payment is reduced to zero for months beginning after December 31, 2018.

Beginning in tax year 2019, Form 1040 and Form 1040-SR will not have the “full-year health care coverage or exempt” box and Form 8965, Health Coverage Exemptions, will no longer be used. You need not make a shared responsibility payment or file Form 8965, Health Coverage Exemptions, with your tax return if you don’t have minimum essential coverage for part or all of the year.

Healthcare Information Forms

Because your health coverage can affect your taxes, you may receive informational forms from insurance providers – the Marketplace, your insurer, or your employer. For more information on these forms — who should expect to receive the forms, how they can be used, and how to file with or without the forms — see IRS.gov’s questions and answers and details on IRS Forms 1095-A, 1095-B, and 1095-C.

What should I do?

Premium Tax Credit: Act Now to Keep Getting Advance Payments

To keep getting advance payments of the premium tax credit, self-attest now on your health insurance marketplace website. Log on to your marketplace account and follow instructions there.

If you purchased health insurance coverage through the Marketplace and benefit from advance payments of the premium tax credit, it is important to report certain life events to the Marketplace throughout the year – these events are known as changes in circumstances.

If your household income goes up or the size of your household is smaller than you reported to the Marketplace – for example, because a son or daughter you thought would be your dependent will not be your dependent for the year of coverage – your advance credit payments may be more than the premium tax credit you are allowed for the year.  If you report the change, the Marketplace can lower the amount of your advance credit payments.  If you don’t report the change and your advance credit payments are more than the premium tax credit you are allowed, you have to reduce your refund or increase the amount of tax you owe by all or a portion of the difference when you file your federal tax return next year.

If your household income goes down or you gain a household member, you could qualify for more advance credit payments. This could lower what you pay in monthly premiums. In addition, reporting your lower household income or new family member could reveal that you qualify for Medicaid or CHIP coverage that is less costly than your Marketplace plan.

Premium Tax Credit Change Estimator
Helps you estimate how your premium tax credit will change if your income or family size changes during the year.

Claiming and Reconciling Premium Tax Credit

If you purchased coverage through the Health Insurance Marketplace, you may be eligible for the premium tax credit. The Health Insurance Marketplace provides an estimate of the amount of the premium credit you will be allowed for that year based on information you provide about your family composition, your household income, and whether or not anyone you are enrolling are eligible for other non-Marketplace coverage. Based on the estimate from the Marketplace, you can choose to have all some, or none of your estimated credit paid in advance directly to your insurance company on your behalf. These are called advanced payments of the premium tax credit or advance credit payments.

Note: If you have excess advance payments of the premium tax credit for 2020 (excess APTC), you are not required to report excess APTC on your 2020 tax return or file Form 8962, Premium Tax Credit. Excess payments are the amounts by which your advance credit payments for the year of coverage exceeded the premium tax credit you are allowed for the year.

For years other than 2020, if advance payments of the premium tax credit were paid for you or someone else on your tax return, you must complete and file Form 8962 and attach it to your return.

If advance credit payments are made for you or an individual in your tax family for coverage in a year other than 2020, and you do not file a tax return, you may not be eligible for advance credit payments in future years. This means you will be responsible for the full cost of your monthly premiums. In addition, you may have to pay back some or all of the advance credit payments made on behalf of you or an individual in your tax family.

If you already filed a 2020 return and reported excess APTC or made an excess APTC repayment, you don’t need to file an amended return or take any other action.

Report changes in circumstances. For the full list of changes you should report, visit HealthCare.gov

If you purchased health insurance coverage through the Marketplace and choose to receive the benefit of advanced payments of the premium tax credit, you need to make sure to report some life events to the Marketplace throughout the year, these events are known as changes in circumstances.

Changes in circumstances that can affect the amount of your actual premium tax credit include:

• Increases or decreases in your household income. Events that could result in a significant increase to household income include:
  • Lump sum payments of Social Security benefits, including Social Security Disability Insurance
  • Lump sum taxable distributions from an individual retirement account or other retirement arrangement
  • Debt forgiveness or cancellation, such as the cancellation of credit card debt
• Marriage or divorce
• Birth or adoption of a child
• Other changes affecting the composition of your tax family which includes you, your spouse if filing jointly, and your dependents
• Gaining or losing eligibility for government sponsored or employer sponsored health care coverage
• Moving to a different address

For a full list of changes you should report, visit Healthcare.gov

If the premium tax credit on your return is more than the advance credit payments made on your behalf during the year, the difference will increase your refund or lower the amount of tax you owe.

For tax years other than 2020, if the advance credit payments are more than the amount of the premium tax credit you are allowed, called excess APTC, you will add the excess APTC to your return. This will result in either a smaller refund or a larger balance due.

What do I need to know?

Businesses and Employers

Business and Employers also have responsibilities and benefits under the Affordable Care Act. The size and structure of your workforce determines what applies to you. Small employers, generally those with fewer than 50 full-time employees, may be eligible for credits and other benefits. Some of the provisions of the Affordable Care Act apply only to applicable large employers, generally those with 50 or more full-time employees, including full-time equivalent employees. For example, applicable large employers have annual reporting responsibilities concerning whether and what health insurance they offered to their full-time employees (and their dependents).

What should I do?

The ACA continues both benefits and responsibilities for employers. The size and structure of your workforce determines what applies to you. If you need help determining the size of your workforce, visit Determining if your Employer is an Applicable Large Employer.

The size of your workforce will help you correctly determine what credits and reporting requirements apply.

Small Business Health Care Tax Credit (SBHCTC)

The Small Business Health Care Tax Credit (SBHCTC) is available to some small employers who offer health insurance to their employees and pay at least half of their premiums. TAS offers SBHCTC Estimators for current and prior tax years to help small employers determine if they qualify for this credit and if so, for approximately how much.

Small Business Health Care Tax Credit Estimator
Find out if you might be eligible for the Small Business Health Care Tax Credit and how much you might receive.

Other Business Provisions

For 2015 and after, the Employer Shared Responsibility Provision (ESRP) requires employers with a certain number of employees to offer qualifying health insurance coverage or make a shared responsibility payment. (IRS has a webinar titled, ACA: Employer Shared Responsibility, which provides an overview of the provision requirements, as well as two others that provide details on information reporting. All are available 24/7 on the IRS Video Portal.)

Other organizations, such as insurers and exempt organizations, also have requirements under the ACA. More information about these groups is available on IRS.gov.

Employer Shared Responsibility Provision Estimator
Employers (for 2016 and forward) can use this tool to determine:

• the number of full-time employees (including FTEs);
• if your company might be an applicable large employer (ALE), and if you are, an estimate of the maximum amount of the potential payment that could apply, if you fail to offer required insurance coverage.

If you have fewer than 25 full-time employees, including full-time equivalent employees, you may be eligible for a Small Business Health Care Tax Credit to help cover the cost of providing coverage.

Generally, employers with 50 or fewer employees may be eligible to buy coverage through the Small Business Health Options Program or (SHOP Marketplace). Learn more at HealthCare.gov.

If you have 50 or more full-time employees, including full-time equivalent employees, you are an applicable full-time employer and need to issue statements to employees and file an annual information return reporting whether and what health insurance you offered employees. ALEs are subject to the employer shared responsibility provisions.

Regardless of size, all employers that provide self-insured health coverage to employees must file an annual return reporting certain information for each covered employee and provide the same information to covered individuals.

What do I need to know?

As a tax professional, individuals or businesses may come to you for assistance regarding the Affordable Care Act and what it means for them. There are many resources available on IRS.gov to assist you with any ACA concerns.

For legal references and official guidance, visit the IRS.gov  ACA Legal Guidance and Other Resources Affordable Care Act Tax Provisions page.

What should I do?

In addition to the IRS.gov ACA Information Center for Tax Professionals, you can use TAS’s ACA Estimators (listed above) with your clients though-out the year for planning purposes.

As a tax professional, you may have individual clients, business clients, or payroll clients, each with different reporting requirements. There are many resources available on irs.gov ACA Information Center for Tax Professionals to ensure you have the most up-to-date information for your clients.