Preparing for “Play or Pay”: Are your employees eligible for premium tax credits?

Posted February 11, 2015 Industry Insights, Expert Tips, Company News

As of January 1, “Play or Pay” penalties are in effect. This means if one of your full-time employees qualifies for premium tax credits for Exchange coverage, it may trigger your employer-shared responsibility penalties under Code § 4980H.
Employers that have employees enrolled in Exchange coverage may want to become familiar with the process although the completion and submittal of the necessary information falls solely on the Exchange enrollee. We’ve provided basic information about the individual IRS form Exchange enrollees will need to complete if they have been receiving advance payment of premium tax credits:

Process for reporting coverage purchased through the Exchange

Taxpayers will receive Form 1095-A from state- and federal-based Exchanges. Form 1095-A is the Health Insurance Marketplace Statement, which reports individual Exchange coverage to the IRS and allows individuals to claim the premium tax credit. It includes:

  • Monthly premium used to compute taxpayer’s advance premium tax credit
  • Total monthly premium for coverage of the taxpayer or family member
  • Amount of advance credit payments

After using Form 1095-A to compute premium tax credit and reconcile the advance credit payments* made on their behalf with the amount of the actual premium tax credit, taxpayers must report this information on Form 8962.

*Advance credit payments are based on the Exchange’s estimate of the premium tax credit that a taxpayer would be able to take.
Process for reporting no minimum essential coverage in 2014

Taxpayers claiming exemption from the individual mandate must report their coverage exemption on Form 8965, and attach it to Form 1040. Individuals who did not maintain minimum essential coverage for each month of their tax year or qualify for an exemption from coverage, will make a shared responsibility payment and report it on Form 1040.

 

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Please note that the information contained in this document is designed to provide authoritative and accurate information, in regard to the subject matter covered. However, it is not provided as legal or tax advice and no representation is made as to the sufficiency for your specific company’s needs. This document should be reviewed by your legal counsel or tax consultant before use.

Additionally, the messages and content within the Pittsburgh Health Care Reform group do not reflect the advisory services of Henderson Brothers, Inc.