Enrolled Agents are aware by now that Congress authorized the IRS to collect a penalty from individuals lacking minimum required health insurance coverage starting in 2014. Compliance with the national healthcare legislation will thus turn into Enrolled Agent jobs very soon. Consequently, every EA should start navigating a number of IRS procedural rules related to healthcare mandates.
The IRS has already proposed regulations that address the requirement of procuring individual health insurance coverage. Married taxpayers filing a joint tax return are equally liable for the penalty imposed upon non-compliance. An important aspect of Enrolled Agent education concerning healthcare measures is that the shared responsibility for minimum essential insurance coverage applies to all individuals that a taxpayer claims as a dependent.
Among the IRS proposed regulations are rules for computing the amount of penalty for lacking minimum essential coverage. Also described in the proposals are when payment is due. Tax advisors with EA certification are certain to confront many questions from taxpayers during 2014 about the minimum insurance coverage limits.
The proposed definition of minimum essential coverage includes health insurance policies that meet the coverage provided under government sponsored programs, such as Medicare, Medicaid, Tricare, and the Children’s Health Insurance Program. Also qualifying for the minimum standards are plans offered through new state health insurance exchanges and certain grandfathered individual plans.
In addition, knowledge from EA CE courses about calculation of the penalty for failure to obtain minimum essential coverage is crucial to helping taxpayers. A few people may prefer to owe the penalty rather than purchase the required insurance. The IRS is prohibited from imposing liens or levies for nonpayment of the shared responsibility penalty. However, the IRS will offset tax refunds to collect the penalty payments.
Members of religious sects that oppose government insurance benefits are exempt from payment of the shared responsibility penalty. Recognizing these instances is therefore a vital component of Enrolled Agent tax advice. Exempt individuals must obtain certificates that confirm their exemptions. The Social Security Administration has a process for acknowledging people who are exempt from health insurance shared responsibility. These are the same individuals who disclaim Social Security benefits and are excused from remitting contributions to that program.
Also exempted from the health insurance mandate are non-citizens, nonresident aliens, incarcerated individuals, and members of Native American tribes. Moreover, no shared responsibility penalty is assessed on people whose household income is below the threshold for filing a tax return or whose required contribution for minimum essential coverage exceeds 8 percent of household income.
IRS Circular 230 Disclosure
Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.