The Affordable Care Act (also known as Obamacare) was passed in 2010. It overhauls the U.S. healthcare system and will be implemented in phases until 2018. This represents the most significant change to our healthcare laws since the passage of Medicaid and Medicare in 1965. The Act utilizes the tax code and tax return in many respects to implement its measures. January 1, 2014 marks the first major implementation of the legislation.

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Six Things You Need to Know

The Affordable Care Act is hundreds of pages long, and impacts virtually every taxpayer and employer. When it takes effect on January 1, 2014, it is important that tax professionals understand the basics at the very least. While every page is important, we’ve broken down the most critical information for tax professionals into six must-know facts.
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[li]Beginning October 1, 2013, uninsured Americans can start shopping for affordable health insurance in the online health insurance marketplace.[/li]
[li]Most uninsured U.S. citizens and legal residents will be required to purchase health insurance by March 31, 2014.[/li]
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[li]Ability for young adults to stay on parents’ plan until age 26.[/li]
[li]Individuals with pre-existing conditions cannot be denied coverage.[/li]
[li]Medicaid will now be offered to individuals under age 65 with income less than about $15,302 ($31,155 for a family of four).[/li]
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[li]Uninsured individuals who purchase health insurance through an online health insurance marketplace or exchange and have income no greater than about $94,200 for a family of four, may be eligible for a government subsidy to help pay for health insurance.[/li]
[li]The subsidy will be in the form of a tax credit.[/li]
[li]Unlike most tax credits, you will not have to wait to receive the credit or subsidy; it will be applied to your insurance premium when you purchase in 2014.[/li]
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[li]Beginning in October 2013, if you’re uninsured or looking for more affordable insurance, you can visit your state’s online health insurance marketplace to see your options.[/li]
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[li]If you are required to purchase health insurance and have not done so by March 31, 2014, you will receive a penalty.[/li]
[li]The tax penalty will be on your 2014 tax return filed in 2015.[/li]
[li]The penalty in 2014 is $95 per adult, $47.50 per child, capped at $285 or 1 percent of household income depending on income, whichever is greater.[/li]
[li]Each year the penalty increases.[/li]
[li]By 2016, it rises to $695 per adult, $347.50 per child, capped at $2085 or 2.5 percent of household income, whichever is greater.[/li]
[li]There is no penalty for a gap in coverage less than three months.[/li]
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You may not be required to purchase insurance and will not see any changes in 2015 on your 2014 tax return with regard to the purchase of insurance if:
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[li]You already have health insurance through your employer, Medicare, Medicaid, or purchased on your own[/li]
[li]You have income below the IRS tax-filing threshold ($9,750 if you are single)[/li]
[li]You have financial hardship[/li]
[li]The lowest cost plan option exceeds 8% of your income[/li]
[li]You are American Indian[/li]
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The Affordable Care Act Simplified for Small Businesses

On January 1, 2014, the Affordable Care Act goes into effect, and most Americans will be required to have health coverage or pay a tax penalty. Businesses with more than 50 employees are required to provide insurance, but small businesses with less than 50 employees are not required to provide insurance. If small business owners choose to provide insurance, they may be eligible for tax credits. If not, businesses can still play a unique role in helping employees get coverage.

Affordable Care Act Small Businesses Basics

On January 1, 2014, the new health care law goes into effect requiring most Americans to have health insurance. That means new accounting rules and regulations.

Critical accounting points for small business owners to know:

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[li]If you are a business owner with fewer than 50 full-time employees, you are not required to offer health insurance[/li]
[li]However, employees must have health insurance or they could be hit with a tax penalty[/li]
[li]Business owners have options if they want to help employees afford insurance[/li]
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That depends on the number of employees. If you are a small business with fewer than 50 full-time employees, you are not required to provide health care insurance under the Act, but there are tax incentives available if you do.

Due to a recent delay of the employer mandate, employers with 50 or more employees now have until 2015 (rather than 2014) to offer health insurance benefits to their employees, or risk paying a penalty of $2000 per employee, starting with the 31st employee.
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Providing health insurance can help you attract the best people and keep them healthy and productive. Businesses with fewer than 50 employees are not required to provide health insurance to employees but subsidies paid to an employee for health insurance can be a strategic move to retain the best talent in your field or type of business.
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A full-time employee is someone who works more than 30 hours per week on average.
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Yes. There will be a few exemptions granted to those who:
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[li]Earn less than the income amount required to file taxes ($9,350 for an individual).[/li]
[li]Belong to a religious group that opposes acceptance of benefits provided by a health insurance policy.[/li]
[li]Belong to a health sharing ministry, or American Indian tribe.[/li]
[li]Are undocumented.[/li]
[li]Are incarcerated.[/li]
[li]Could not find “affordable” coverage that cost less than 9.5% of their income.[/li]
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They will be subject to penalties. The 2014 penalties for not having health insurance are as follows: $95 per adult and $47.50 per child (up to $285 per family), or 1% of the annual family income, whichever is greater. The penalty is expected to go up every year until 2016.
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Yes, government subsidies will be available for low and moderate-income families.
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All companies with at least $500,000 in annual revenue and at least 1 employee must notify their employees about health coverage options, including the existence of the new insurance exchanges by October 1, 2013. Employers are required to provide notice to each employee at the time of hiring beginning October 1, 2013. For 2014, the employer can provide notice within 14 days of the employee’s starting date.

Department of Labor, Technical Release No. 2013-02: http://www.dol.gov/ebsa/newsroom/tr13-02.html

Employee notification forms:
CLICK HERE for employers who offer health insurance to at least one employee
CLICK HERE for employers who don’t offer health insurance
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