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ACA: A Maze of Rules and Reporting Requirements

Corn-mazeMy daughter, her fiancé and I were recently looking for something fun to do in Washington, D.C.  As we were poking around, we found a special attraction at the National Building Museum – a maze. 

When we took our first steps into the maze, we felt excited but a little apprehensive. We knew there would be twists and turns to weave through. We wondered, would it be easy to navigate or would we get lost in a sea of offshoots and dead ends? But as we made our way through, apprehension gave way to pure fun!

Sorting through the rules and reporting requirements of the Affordable Care Act feels a lot like finding your way through a maze but without all the fun. The ACA provides plenty of twists and turns but they don’t seem to lead tax practitioners out of anything. They just seem to lead us deeper down a dimly lit corridor toward more rules to master and more forms to file, which means more work to do.

The Internal Revenue Service, on the other hand, has been working hard to arm us with some ACA navigational tools.  The most recent of which came in the form of... well... forms... both new and revised, which they issued in draft format.  We are hopeful that the instructions will be released by the beginning of September.  The AICPA will be reviewing these forms closely and offering recommendations to the IRS for ways to make them easier to use.

Here’s a snapshot of the new information reporting forms:

New Information Reporting Forms

Purpose

Timing

Form 1095-A, Health Insurance Marketplace Statement

Marketplaces will report information on coverage provided to each enrollee

 

Filing begins in the 2014 tax year

Form 1095-B, Health Coverage

Insurers will report information on coverage provided to each enrollee

 

Optional for the 2014 tax year and mandatory for 2015

Form 1094-B, Transmittal of Health Coverage Information Returns

To be used to report all Forms 1095-B with the IRS

 

Optional for the 2014 tax year and mandatory for 2015

Form 1095-C, Employer-Provided Health Insurance Offer and Coverage

Applicable large employers will report information on coverage for each employee

Optional for the 2014 tax year and mandatory for the 2015 tax year

 

Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns

This form will be the method of transmitting all Forms 1095-C to the IRS. 

 

See filing requirements for Form 1095-C

 

And, the new/revised forms to be filed with a taxpayer’s federal income tax return, beginning in 2014 are:

New or Revised Tax Return Related Forms

Purpose

Form 1040

Line 46 - report the excess of any Premium Tax Credit received throughout the year.

 

Line 61 - report whether the taxpayer has minimum essential coverage or owes a penalty

 

Line 69 – report the amount of PTC

 

Form 8941, Credit for Small Employer Health Insurance Premiums

Updated to accommodate the recently released final regulations

 

Form 8962, Premium Tax Credit (PTC)

New form to be used to claim the PTC or to reconcile any advanced PTC amounts received during the year to cover health insurance premiums

 

Form 8965, Health Coverage Exemptions

New form to be used to report an exemption from the insurance requirements

 

As daunting as they may seem at first, the rules and reporting requirements of the ACA can be tackled - the AICPA, in addition to working to improve the forms, will be hosting several webcasts this fall to explain the intricacies of compliance.  We will also be offering you materials to give clients, starting with this two-page overview for individuals, What the Affordable Care Act Means for You.  Look for all of these and other information and resources on the Health Care Reform Resource Center.  

Kristin Esposito, CPA, Tax Technical Manager, American Institute of CPAs. Kristin serves as staff liaison to the International Tax Technical Resource Panel as well as the Employee Benefits Tax Technical Resource Panel and related task forces.  Before coming to the AICPA, Kristin spent more than 15 years in a variety of corporate tax positions.  She holds a Bachelor of Science in Business Administration with a concentration in Accounting from West Chester University and a Master of Taxation from Villanova School of Law.

Corn maze image via Shutterstock

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