IRS Gives One More Year for Obamacare Business Reporting

Last updated on July 8, 2022

According to the filing requirements of the Affordable Care Act (ACA), or Obamacare, businesses are required to report to the IRS each of their workers’ access to and enrollment in health insurance. However, the complexity of the reporting process has led to the IRS postponing enforcement of the law for another year.

Tax News shares the new rules of Obamacare that will be enforced starting 2014:

“Key provisions of the ACA are the ’employee mandate’ and ’employer mandate’ in that most Americans will be required to maintain ‘minimum essential’ health insurance coverage, and large employers will be encouraged to offer that health coverage. Beginning in 2014, those individuals and employers who do not comply with their mandates were to make “shared responsibility” payments, or tax penalties, to the Internal Revenue Service (IRS).

For individuals, that payment will be equal to the greater of $95 or one percent of their taxable income in 2014, $325 or two percent in 2015, and $695 or 2.5 percent from 2016 onwards. Individuals will thereby, it is said, be able to choose not to have health insurance and pay higher taxes, or purchase health insurance and pay lower taxes.

Large employers with 50 or more full-time workers are also to be encouraged to offer that health coverage, or pay a penalty tax to the IRS of $2,000 to
$3,000 per employee if any of their workers (exempting the first 30) had to obtain, instead, health insurance coverage through a health insurance exchange.”

As of 2013, individuals can claim deductions for medical expenses that are not covered by their health insurance. Only medical expenses that reach 10 percent of their adjusted gross income are tax deductible. These deductions can be included in the 2013 tax return that will be filed in 2014.

As far as penalties are concerned, Tax News shares, “While that process is in hand, it is to suspend the large employer reporting for 2014, and, as employer mandate payments can only be assessed based on that reporting, employers would also not be assessed for penalties before 2015.

On the other hand, the Treasury Department has also confirmed that no other ACA provisions are to be delayed. That means that the individual mandate, and the assessment of its tax penalties, will still apply in 2014, as will the tax credits for qualifying individuals who purchase health insurance through an exchange.”

Delays in implementing the employer mandate are making many suspect that the law might not be able to work as effectively as expected. Amidst the opposition and doubts, the law is slowly taking effect. How effectively it works can only be judged after its full implementation.