ACA: Impact of Decisions This Fall

The Affordable Care Act requires every individual not exempt from the law to have minimum essential health coverage or pay a penalty. The penalty amount for lacking coverage in 2016 is substantial and could be even higher for 2017.

1. Take advantage of open enrollment

If you do not have coverage through an employer (yours, your spouse’s, or your parent’s employer if you’re under age 27) or government program, such as Medicare, you must obtain coverage on your own. You can buy health insurance directly from private insurers or through a government Marketplace.

Open enrollment for 2017 coverage through Healthcare.gov begins on November 1, 2016. The last day to enroll for 2017 or make changes to plans is December 15, 2016. Obtaining coverage here may entitle you to a government subsidy to help pay monthly premiums in the form of an advance premium tax credit.

2. Review coverage offers from employers

If you are a full-time employee of an applicable large employer (a company with 50 or more full-time and full-time equivalent employees), you likely will be offered health coverage. (ALEs that fail to offer coverage are penalized.) Determine whether the coverage is “affordable” to you. If yes, you are ineligible to decline it and obtain a subsidy from the Marketplace. If it’s not affordable, then check out the Marketplace.

For 2017, coverage will be treated as affordable if your contributions toward your coverage are no more than 9.69% of household income (the percentage for 2016 was 9.66%). Your employer is required to inform you about affordability in its coverage offering.

More and more employers are offering a high-deductible health plan combined with a health savings account (HSA) to meet their shared responsibility requirements. If you are unfamiliar with this arrangement, learn what it means to you. It may prove to be a great option, especially if you are healthy and don’t need to use funds from the HSA.

3. Watch for premium tax credit audits

If you obtained a subsidy for coverage in 2016, the Centers for Medicare and Medicaid Services (CMS) have begun reviewing taxpayer subsidies. CMS is reviewing whether taxpayers who claimed the credit were actually eligible for one. CMS is looking for:

• Taxpayer claims of income and household size
• Employer coverage offers if a taxpayer works for an ALE

These audits began in June 2016. Expect that they will continue to be conducted for any claims to subsidies for 2017 coverage.

In addition, the IRS is looking at premium tax credit claims. According to a Treasury Inspector General for Tax Administration (TIGTA) report on May 3, 2016, it found that as of June 11, 2015, the IRS had processed more than 2.9 million returns claiming a total of $9.8 billion in premium tax credits for 2014. It also found that about 1.25 million received more in credits than they were entitled to, some of which was repaid on returns filed in 2015. The IRS will continue to review tax returns claiming the premium tax credit.

Conclusion

Determine your coverage options for 2017. Regardless of any tax reform and other legislation that may occur under a new administration next year, the ACA rules for 2017 likely will be basically the same; any revisions or repeal would take time to transition to so this won’t happen until 2018.