Affordable Care Act: Where Things Stand Now
The main provision of the Patient Protection and Affordable Care Act of 2010, otherwise known as the Affordable Care Act (ACA), applies starting in 2014: Each person, other than those who are exempt, must have minimum essential coverage or pay a penalty. Each person must ensure that dependents also have minimum essential coverage or pay a penalty, which is one-half of the amount that would be paid by the person. In the words of the U.S. Supreme Court in NFIB v. Sebelius (132 S. Ct. 2566 (2012)), the penalty is a tax and it is collected by the IRS. The rules are very confusing to many people. Here are some of the practical and tax considerations of ACA as of now. The following information has been prepared with the help of Dr. Carolyn McClanahan, president of Life Planning Partners, Inc., a financial planning firm in Jacksonville, Fla.
Overview of ACA
The massive law is divided into various titles, some of which may be relevant to your practice while others are not.
• Title I (374 pages) covers quality affordable health care (including the individual mandate).
• Title IX (93 pages) covers the revenue provisions.
While the individual mandate contained in Title I is effective starting Jan. 1, 2014, many of the revenue provisions have already taken effect.
Every individual is required to have minimum essential coverage or pay a tax penalty (Code Sec. 5000A) unless a specific exemption applies. The exemptions include:
• Financial hardship;
• Religious objection;
• Native Americans;
• Incarcerated individuals;
• Those without coverage for no more than three months;
• Those whose premiums exceed 8 percent of income;