1. The Patient Protection and Affordable Care Act (ACA) –
What You Need to Know
Hello, I’m (insert name here) and I want to thank you attending today’s presentation.
Today I am here to discuss a key tax provision, the Patient Protection and Affordable Care Act (will refer to it as ACA) that will affect everyone’s individual income tax return. As we are going to cover a lot of information, I ask that you please hold your questions until the end.
Before I get started, let me tell you a little bit about myself. I currently serve as the (INSERT BIO HERE)
OK, enough about me -- let’s move on.
Handouts:
Ppt, F. 1040, F. 8965, I. 8965, F A, F. 8962, I. 8962

2. HHS & Role of the Health Insurance Marketplace
HHS: Administers the Marketplace and advance payments of PTC and other financial assistance
Marketplace: Health Insurance options, purchases & financial assistance
HealthCare.gov has more information
While the Department of Health and Human Services, or “HHS,” is the lead agency for administering the Affordable Care Act, the IRS is responsible for administering the tax provisions included in the Act.
HHS is responsible for enrolling individuals for health care coverage through the Health Insurance Marketplaces, and helping individuals get the appropriate financial assistance, including advance payments of the premium tax credit. The Marketplace is the main source for health insurance options under the ACA and the only source for advance payments of the premium tax credit.
The first open enrollment period for the health insurance marketplace closed on March 31, Now, individuals and families can purchase insurance for 2014 through the Marketplace only if they experience a qualifying life event, such as moving to a new state, or experiencing a change in income, a marriage, a divorce or the birth of a child. The next open enrollment period, for 2015 health insurance, begins later this year on November 15, 2014.
The best place to find out more on HHS/Marketplace related topics is HealthCare.gov.

3. The Individual Shared Responsibility Provision
First we’ll cover, Section 5000A, the Individual Shared Responsibility Provision (ISRP),

4. What is the Individual Shared Responsibility Provision?
Starting in 2014, everyone must either:
Have Minimum Essential Coverage (MEC)* OR
Have a Coverage Exemption
Make a Shared Responsibility Payment
*Minimum essential coverage must be maintained each month each month
Under the Affordable Care Act, the federal government, state governments, insurers, employers and individuals have a shared responsibility to reform and improve the availability, quality and affordability of health insurance coverage in the United States.
Starting in 2014, the individual shared responsibility provision requires all individuals to have for each month in the year either minimum essential coverage (also known as MEC), or an exemption. If for any month in the year an individual doesn’t have coverage or an exemption, they must make a payment for those months when filing their income tax return.
Most individuals in the United States already have health coverage today that qualifies as MEC, and will not need to do anything more than continue the coverage they now have.
So, who is subject to this provision?
The individual shared responsibility provision applies to individuals of all ages, including children.
Every individual must address the MEC coverage requirement on their 2014 tax return; all of the 1040 forms will be updated so that an individual can either (1) indicate that everyone in their family had coverage for the whole year, (2) attach a schedule to report or claim an exemption or (3) report and make the shared responsibility payment.
An adult or married couple who can claim a child or another individual as a dependent for federal income tax purposes is responsible for ensuring that all their dependents have minimum essential coverage or have an exemption from the coverage requirement. They will need to make a payment for each month they or any of their dependents did not have coverage or an exemption.
Senior citizens also are subject to these requirements, but both Medicare Part A and Medicare Part C (also known as Medicare Advantage) qualify as MEC.
These requirements apply to U.S. citizens as well as all noncitizens who are in the United States long enough during a calendar year to qualify as resident aliens for tax purposes. United States citizens living abroad are treated as having minimum essential coverage if they are not physically present in the U.S. for at least 330 full days within a 12-month period or if they are bona fide residents of a foreign country for the entire taxable year. U.S. citizens who meet neither the physical presence nor the residency requirements will need to maintain minimum essential coverage, qualify for an exemption or make a shared responsibility payment.
Now let’s review what I went over:
Each person must have “minimum essential coverage” OR, a coverage exemption. If they do not, then a shared responsibility payment is required.
I will now explain what minimum essential coverage means and then I will get into who may be exempt. Finally, I will cover reporting and making a payment.

5. What Information Documents will an Individual Receive?
Starting with 2014 tax year:
Form 1095-A, Health Insurance Marketplace Statement
Starting with 2015 tax year:
Form 1095-B, Health Coverage
Form 1095-C, Employer-Provided Health Insurance Offer and Coverage
The ACA requires three new types of information reporting to the IRS and to individuals about certain types of coverage. Similar to Form W-2 reporting, one copy is filed with the IRS and another copy is provided to the individual.
The new information reporting follows the current cycle of information reporting.
The applicable forms will be sent to individuals by January 31st of the year following the coverage.
The first type of information reporting is the Form 1095-A, Health Insurance Marketplace Statement reporting. Starting with the 2014 tax year, the Marketplace will issue Form 1095-A to the IRS and to individuals who purchased coverage through the Marketplace. The 1095-A, will provide a summary of coverage that the individual purchased through the Marketplace and the total of any advance payments of the premium tax credit made on the individual’s behalf.
Two other types of information reporting will be required beginning with the 2015 tax year.
Form 1095-B, Health Coverage reporting, will be issued by any entity that provides MEC, such as an insurance company or a government program like Medicaid or Medicare. The 1095-B will inform the IRS and the individual of the months that the individual had MEC. This form will provide the most relevant information to show compliance with the shared responsibility provision.
The last type of reporting is Form 1095-C, Employer-Provided Health Insurance Offer and Coverage reporting. The 1095-C will be issued by employers who are deemed to be Applicable Large Employers (ALEs) under the employer shared responsibility provisions in section 4980H. ALEs will report to the IRS and to the employee whether the employer offered affordable minimum value coverage and whether the employee was enrolled. Please note the1095-C will only be issued to employees of ALEs, not to employees of smaller employers.
Forms 1095-A and 1095-B, in general, will report who provided the coverage and who in the family was covered each month of the year. Generally, an individual can expect to receive at least one of these forms if they have some type of MEC.
As I noted, the 1095-B reporting of health insurance coverage and the 1095-C reporting of employer-provided health coverage are not effective until However, issuers may voluntarily comply with the requirement in 2014; therefore, taxpayers could receive a Form 1095-B or C in 2015 for the 2014 tax year.
This means that by January 31, 2015, taxpayers that purchase coverage through the Marketplace will receive a statement reporting information about that coverage, but may not receive statements reporting information about employer-provided coverage or other MEC.
You may be wondering how an individual will be able to show they had MEC in 2014 if they do not receive any information reporting. The IRS will be issuing forms and instructions that will let taxpayers know how to report MEC on their 2014 returns filed in And, by January 31, 2016, all the reporting requirements will be in effect and taxpayers who have MEC will receive one or more of these forms to help determine months of MEC and whether a shared responsibility payment is due.

6. What is Minimum Essential Coverage?
Employer-sponsored plans, including COBRA and retiree coverage
Coverage purchased in individual market and the new Marketplace
Coverage under specified government-sponsored programs
Internal Revenue Code Section 5000A(f) spells out what types of coverage qualify as Minimum Essential Coverage or MEC. The major categories are listed on the screen here.
Also, the IRS has posted a chart listing specific plan types that meet MEC and those that do not on IRS.gov/aca. So you don’t have to take notes on which plans are MEC as we cover them today – just visit our website. You can also check HealthCare.gov.
Plans that do meet MEC include:
Coverage under an eligible employer-sponsored plan, including COBRA plans and retiree coverage. This category covers most group health plans, both insured and self-insured, provided by employers for the benefit of employees and their dependents.
Coverage under most health plans purchased in the individual market, and all qualified health plans offered through the Health Insurance Marketplace.
Coverage under certain government-sponsored programs, such as Medicare Part A and Part C most Medicaid coverage, the Children’s Health Insurance Program (CHIP), and certain other government programs. You can find a complete list of government programs that qualify as MEC on our website at IRS.gov/aca.
Now that I provided you with examples of coverage that meet the MEC standard, I will cover the health-related insurance policies that do not meet the definition of MEC.
Generally, specialized coverage is not MEC. Some examples are:
Coverage solely for vision or dental care,
Workers compensation,
Accident or disability policies, and
Medicaid coverage that provides only specialized services like family planning, tuberculosis-related services and limited treatment of certain conditions.
You can find other examples of specialized coverage on the ACA pages of the IRS website, at IRS.gov/aca.
The IRS has issued transition relief for 2014 for individuals eligible for and covered under some limited-benefit government health programs. Information will be made available later this year about how the income tax return will take into account coverage under one of these programs. For more information about the transition relief, see the IRS proposed regulations issued on January 23, 2014, which are posted on IRS.gov/aca.
As I said earlier, most individuals in the United States have health coverage today that qualifies as MEC, and will not need to do anything more than continue the coverage that they now have. Individuals who have insurance coverage as shown on this slide do not need to purchase any other coverage to satisfy the shared responsibility provision.
For those individuals who do not have coverage, or who anticipate discontinuing the coverage they have currently, or who want to explore whether more affordable options are available, you may refer them to the Health Insurance Marketplace at HealthCare.gov. The Marketplace helps individuals compare available coverage options, assess their eligibility for financial assistance and find minimum essential coverage that fits their budget.
Note: Enrollment options may be limited until the start of the next open season scheduled to begin in November of 2014, although there are special enrollment periods for individuals who have certain life changes during the year. You can check HealthCare.gov for more information.

7. Reporting MEC All Year

8. What Qualifies as an Exemption?
Exemptions from coverage requirements:
Member of a:
Recognized religious sect conscientiously opposed to accepting insurance benefits
Health care sharing ministry
Federally recognized Indian tribe
No filing requirement
Short coverage gap (< 3 months)
Before I discuss this slide, I would like to point out that on IRS.gov/aca you will find a detailed exemption chart for reference, but today I will discuss the nine (9) main categories.
So what qualifies as an exemption?
Exemptions from the coverage requirements include:
1) Religious conscience: An individual who is a member of a religious sect that is recognized by the Social Security Administration as being conscientiously opposed to accepting any insurance benefits. Speaker Note: These are described in Internal Revenue Code Section 1402(g)(1)).
2) Health care sharing ministry: An individual who is a member of a health care sharing ministry. A health care sharing ministry is defined as a section 501(c)(3) organization whose members share a common set of ethical or religious beliefs and have shared medical expenses in accordance with those beliefs continuously since at least December 31, 1999. 
3) Indian tribes: An individual who is a member of a federally recognized Indian tribe.
4) Have no filing requirement: An individual whose income is below the minimum threshold for filing a tax return. To find out if someone is required to file a federal tax return, you can use the IRS Interactive Tax Assistant or see the filing exemption chart in the Form 1040 instructions. In general, an individual need not file a return to claim this exemption. Individuals whose gross income is below the return filing threshold, but who file a return anyway, may claim an exemption when filing their return.
5) Short coverage gap: An individual who had a gap in coverage that is less than three consecutive months during the year. If an individual has more than one short coverage gap during a year, only the first gap qualifies for a short coverage gap exemption. For purposes of the individual shared responsibility payment generally, and specifically for determining the coverage gap, you are considered to have minimum essential coverage for the entire month as long as you have minimum essential coverage for at least one day during that month.
(Speaker note: Go to next slide for more exemptions)

9. Additional Exemptions
Hardship (Defined by HHS)
No affordable coverage ( > 8% HHI)
Incarceration
Not lawfully present in U.S.
6) Hardship: An individual who suffered a hardship that makes them unable to obtain coverage, as defined by the Department of Health and Human Services.
HHS has issued guidance on some specific circumstances that will qualify as hardships. I’d like to mention two of them in particular.
First, HHS established a hardship exemption to provide relief for individuals who purchased insurance through the Marketplace towards the end of the initial open enrollment period; and who would potentially be subject to a shared responsibility payment for the months prior to the effective date of the individual’s coverage. These individuals will now be able to claim this exemption when filing their tax return.
Second, HHS established a hardship exemption for individuals whose insurance plans were cancelled and who believe other Marketplace plans are unaffordable. Individuals can request this hardship exemption through the Marketplace.
7) Affordability: An individual who can’t afford coverage because the minimum amount they must pay for their premium is more than eight percent of the household income. Household income is the adjusted gross income from the individual’s tax return plus any excludible foreign earned income and tax-exempt interest they receive during the taxable year. Household income also includes the incomes of all of their dependents who are required to file tax returns.
Please note that at the end of this presentation, we have included a glossary slide with the definition of household income. You should note that the definition of household income for the individual shared responsibility provision differs slightly from the definition as it is applied to the premium tax credit.
8) Incarceration: An individual who was convicted and is serving a sentence in a jail, prison, or similar penal institution or correctional facility.
9) Not lawfully present: An individual who is not a U.S. citizen, a U.S. national, or an alien lawfully present in the U.S. also qualifies for an exemption.

10. Getting an Exemption
Obtained from Marketplace or IRS depending upon the type of exemption
Exemptions from the Marketplace need to be obtained at the earliest opportunity
Exemptions from the IRS can be obtained only by filing a federal tax return with new Form 8965
So how do people obtain an exemption?
Some exemptions can be granted only by the Health Insurance Marketplace, some may be requested only through the IRS at tax filing and others can be obtained through either process. Exemptions from the Marketplace need to be obtained at the earliest opportunity. Taxpayers should not contact the IRS before the tax filing to request an exemption.
So if you think someone qualifies for an exemption, how do they obtain it?
Again, it depends upon the exemption.
The religious conscience exemption and most hardship exemptions are available only through the Marketplace. The Marketplace will assign an Exemption Certificate Number (or ECN) when granting an exemption; the ECN will be used to report the exemption as part of the 1040 tax return filing.
Guidance on how to obtain an exemption from the Marketplace is available on HealthCare.gov.
The exemptions for membership in a federally recognized Indian tribe, membership in a health care sharing ministry and for incarceration are available through the Marketplace or through the IRS as part of filing a federal income tax return. The health care sharing ministry and incarceration exemptions are only granted retrospectively, however.
The exemptions for lack of affordable coverage, a short coverage gap, certain hardships and individuals who are not lawfully present in the United States may be claimed only when filing a federal income tax return. Again, please note that individuals with household income below the filing threshold are not required to file a federal tax return just to obtain that exemption.
I’d like to emphasize that the IRS will accept requests for an exemption from coverage only at the time of filing. IRS will not grant an exemption from coverage by phone or correspondence.
Also, as I previously mentioned, on IRS.gov/aca we provide a comprehensive list of all exemptions and how each exemption must be obtained.

11. When Would an Individual Need to Make a Payment?
A payment may be due for an individual and dependents, if they don’t have:
MEC for every month of the year, or
An exemption for the months without MEC.
So, when would an individual need to make a payment?
A payment is due for an individual and any dependents if they don’t have:
MEC for every month of the year, and
An exemption for the months without MEC.
This information – MEC, exemption or payment – will be reported to the IRS on the federal income tax return each year, starting with the 2014 return that is generally due and filed in 2015.
Next, let’s get into how the payment is calculated. Then we will discuss information that the IRS and individuals will receive about the individual’s health care coverage, and how the individual will report this information on the tax return.

12. How is the Payment Calculated?
Individual shared responsibility payment calculations are based on the greater of the percentage of income OR the flat dollar amount
For families, the shared responsibility payment cannot exceed 3x the flat dollar amount
Shared responsibility payment amount may not exceed an amount equal to the national average premium for bronze level qualified health plans
Percentage
income
(annual)
Flat dollar amount (annual)
1% of household income
$95 per adult
50% for individuals under 18
2% of household Income
$325 per adult
2.5% of household income
$695 per adult
2.5% of
household
$695 per adult plus an increase based on cost of living
Greater of
If someone is liable for the individual shared responsibility payment, how much will they have to pay?
The payment computation, to put it as simply as possible, is the greater of a percentage of income or a flat dollar amount, but no more than the national average premium for bronze level coverage.
The “flat dollar amount” for one adult is $95 for tax year 2014, increasing to $325 for tax year 2015 and $695 for tax year After that, a cost-of-living adjustment will apply to the flat dollar amount each year. These figures are halved if the individual without coverage is under 18 as of the beginning of the month.
The maximum flat dollar amount for a family cannot exceed 300% of the amount for one adult no matter how many dependents are in the family. So, for 2014 the maximum flat dollar amount for a family is $285 ($95 x 3).
I’ve covered the flat dollar amount method, so let’s look to the income percentage method. The percentage of income amount is the percentage of the excess portion of household income over the federal income tax filing threshold for the primary tax filer (or joint filers) in the family.
The percentage for 2014 is one percent.
The percentage increases to two percent for 2015 and two-and-a-half percent for 2016 and is adjusted for years after 2016.
We must compare the flat dollar amount and the income percentage amount and use the greater of the two amounts. The resulting amount is then capped at the national average premium for a “bronze level” health plan that is offered through the Marketplace and provides coverage for the applicable family size involved. Thus, the individual shared responsibility payment is the greater of the flat dollar amount or the percentage of income amount, but never more than the national average premium for the “bronze level” plan.  
This ensures that the payment amount is never more than the approximate cost of basic coverage for a year.
The IRS recently issued guidance on the national average bronze plan premium (Rev. Proc ). For 2014, the annual national average premium for a bronze level health plan available through the Marketplace is $2,448 per individual ($204 per month per individual), but $12,240 for a family with five or more members ($1,020 per month for a family with five or more members). 
Capping the payment at the national average bronze plan premium ensures that the payment amount generally will not be more than the approximate cost of basic coverage for a year.  
That was a lot of information so let’s go over some examples.

13. Sample Calculation Facts: Payment calculation:
Single individual, no dependents,
No minimum essential coverage for any month
Does not qualify for an exemption
Household income = $40,000 /filing threshold = $10,150
Payment calculation:
Percentage of income:
$40,000 – 10,150 = $29,850,
1% x $29,850 = $298.50
Flat dollar: $95
2014 ISRP = $ ($ is > $95)
< the national average for bronze level coverage
Before we go over these examples, I would like to mention that there will be a worksheet in the tax forms instructions to compute the payment amount. That payment amount will then be reported on the federal income tax return.
This sample calculation is for a single individual with $40,000 income:
Jim, an unmarried individual with no dependents, does not have minimum essential coverage for any month during 2014 and does not qualify for an exemption. For 2014, Jim’s household income is $40,000 and his filing threshold is $10,150. (*See the filing thresholds chart in any of our individual tax form instruction booklets or on IRS.gov)
To determine his payment using the percentage of income formula, subtract $10,150 (filing threshold) from $40,000 (2014 household income).
The result is $29,850. One percent of $29,850 equals $
Jim’s flat dollar amount is $95.
Jim’s annual national average premium for bronze level coverage for 2014 is $2,448 (per Rev. Proc ).
Because $ is greater than $95, and is less than the national average bronze plan premium of $2,448, Jim’s shared responsibility payment for 2014 is $
Jim will make his shared responsibility payment for the months he was uninsured when he files his 2014 income tax return, which is due in April 2015.
 Okay why don’t I do one more sample calculation on the screen.

14. Sample Calculation Facts: Payment calculation:
Married w/two children under 18
No minimum essential coverage for any month
Does not qualify for an exemption
Household income = $70,000/filing threshold = $20,300
Payment calculation:
Percentage of income:
$70,000 – 20,300 = $49,700,
1% x $49,700 = $497
Flat dollar: 285 = ((95 x 2) + ($95/2 x 2))
2014 ISRP = $497 ($497 is > $285)
< the national average for bronze level coverage
Our second example is for a married couple with 2 children with $70,000 household income
Eduardo and Julia are married and have two children under 18. They do not have minimum essential coverage for any family member for any month during 2014 and no one in the family qualifies for an exemption. For 2014, their household income is $70,000 and their filing threshold is $20,300.
To determine their payment using the percentage of income formula, subtract $20,300 (filing threshold) from $70,000 (2014 household income).
The result is $49,700. One percent of $49,700 equals $497.
Eduardo and Julia’s flat dollar amount is $285, or $95 per adult and $47.50 per child. The total of $285 is the flat dollar amount in 2014.
The family’s annual national average premium for bronze level coverage for 2014 is $9,792 ($2,448 x 4), from Rev. Proc
Because $497 is greater than $285 and is less than that national average bronze plan premium of $9,792, Eduardo and Julia’s shared responsibility payment for 2014 is $497.
For more examples of the calculation, see the information on our IRS.gov/aca pages or the final regulations under Section 5000A.

15. Reporting Shared Responsibility Payment

16. Individual Shared Responsibility Provision Summary
Everyone must :
Have Minimum Essential Coverage,
An Exemption, or
Make a Shared Responsibility Payment
MEC is reported on the tax return
Exemptions are reported on Form 8965 filed with the tax return
The shared responsibility payment is reported on the tax return
Payment, if due, is reported and paid with the tax return
Starting in 2014, the individual shared responsibility provision calls for each individual to have minimum essential coverage for each month of the year, qualify for an exemption, or make a payment when filing his or her federal income tax return.
Minimum essential coverage plans and plans that do not meet MEC are listed on IRS.gov and can also be found on HealthCare.gov.
Most individuals in the United States already have health coverage today that qualifies as MEC and they will not need to do anything more than continue the coverage they have and report their coverage with their filed income tax return.
If an individual does not have MEC coverage already they should:
Get health care coverage that is MEC. Applying for health care coverage through the Marketplace will help an individual get health care coverage that is affordable,
Determine if they qualify for an exemption granted by the Marketplace and if so, request the exemption from the Marketplace,
Claim an exemption on their return, if they qualify, or
Make a shared responsibility payment.
A full listing of exemptions and information on how and where to apply for each is available on both IRS.gov/aca and HeathCare.gov.
Taxpayers who purchased coverage through the Marketplace should receive information reporting from the Marketplace by Jan. 31 of the year following the coverage period. That coverage information will be shown on Form 1095-A.
Finally, starting in 2014, taxpayers will report full-year minimum essential coverage or the shared responsibility payment on their Form 1040 series federal income tax return. Exemption information will be reported on Form 8965, which will be attached to the return. Partial year MEC coverage and the calculation to determine the individual shared responsibility payment will be entered on a worksheet that will not be attached to the return.

17. The Premium Tax Credit
Now let’s discuss the premium tax credit.

18. What is the Premium Tax Credit?
Refundable tax credit claimed on new Form filed with Form 1040
To help eligible individuals and families pay for health insurance
Two payment options:
Get it Now – advance credit payments
Get it Later – without advance credit payments
Marketplace administers Advance Payment of PTC (APTC)
So, what is the premium tax credit?
It’s a refundable credit available to help eligible individuals and families with the cost of purchasing health insurance from the Marketplace. To be eligible, household income (I’ll talk more about household income later) must be between 100 and 400 percent of the federal poverty line for the family size. Essentially, the credit reduces a person’s out-of-pocket costs incurred for health insurance premiums – hence the name “premium” tax credit.
Although an individual with an income equal to 400 percent of the federal poverty line may be eligible to claim the premium tax credit, the credit amount is based on a sliding scale, with greater credit amounts available to those with lower incomes. Other factors that affect the credit amount include the cost of available insurance coverage, household income and family size.
As you can see, an eligible individual has the option to “get it now” or “get it later.”
“Get it now” means advance payments of the anticipated credit are made directly to the insurer before a tax return is filed. The advance payments of the premium tax credit lowers the cost of health insurance premiums the individual must pay each month. Eligible individuals may choose to have the full amount, or a lesser amount, of the advance credit payments provided directly to the insurance company. Getting advance payments of the anticipated credit is done through an application process at the appropriate Marketplace.
The amount of the advance credit payment is based on the person’s projected household income for the upcoming year. Advance credit payments are likely to differ from the credit amount, which is based on actual household income when the tax return is filed. For this reason, the advance credit payment amount must be reconciled against the actual credit amount on the tax return based on the actual household income for the year. Moreover, it’s imperative that an individual report any change in circumstances to the Marketplace so that the advance payments of the premium tax credit can be adjusted as appropriate to minimize the effect on the amount of refund or tax due at tax filing time.
“Get it later,” means getting the premium tax credit at the time of filing a tax return, without receiving advance credit payments. Because the premium tax credit is claimed on the federal income tax return that is filed the following year, the “get it later” option essentially is a reimbursement for a portion of the insurance premiums the taxpayer already paid for a plan they purchased in the Marketplace. Getting it later is done through the process of filing a tax return with the IRS. Taxpayers, even those who get advance credit payments, must claim the credit by filing a federal income tax return.
The premium tax credit can reduce a person’s federal tax liability and lower a balance due, or it may create or increase the amount of a refund. Because the premium tax credit is refundable, an individual who has little or no income tax liability can still receive the full benefit of the credit as a refund.
If an individual’s actual allowable credit is more than the advance credit payments, the difference will be added to the individual’s refund or subtracted from the balance due. On the other hand, individuals whose advance credit payments are more than their premium tax credit will owe the excess as an addition to their tax, subject to a repayment cap if their income is between 100 and 400 percent of the federal poverty line.
If a person receives advance payments of the premium tax credit, the amount of advance payments received during the year must be reconciled on the income tax return for that year. They must do this even if they would not otherwise be required to file a tax return.
There are two new lines on Form 1040 for the premium tax credit. New line 46 is where a person reports any excess advance credit payments and new line 69 is where a person claims the premium tax credit. There is also a new Form 8962 which will be used to claim the premium tax credit regardless of whether any advance credit payments were made, and reconcile advance credit payment amounts. We’ll talk in more detail about Form 8962, the reconciliation process, and the repayment cap later in the presentation.

19. PTC Eligibility You may be eligible if you meet all of the following:
buy health insurance through Marketplace
are ineligible for coverage through employer or government plan
are within certain income limits
do not file a Married Filing Separately tax return (unless you meet the criteria in section 1.36B-2T(b)(2) of the Temporary Income Tax Regulations, which allows certain victims of domestic abuse and spousal abandonment to claim the premium tax credit
cannot be claimed as a dependent by another person
Now we’ll take a look at who is eligible for the credit and cover a little bit of new terminology.
To get the premium tax credit, an individual must meet all of the following:
The applicable taxpayer or member of the taxpayers’ family MUST enroll in a Qualified Health Plan (QHP) at the Marketplace (to enroll an individual must be a U.S. citizen or lawfully present and cannot be incarcerated)
The enrollee is not eligible for other minimum essential coverage through an employer or government plan
Has household income between 100 and 400 % of Federal Poverty Line (FPL) based on family size, with some exceptions
Does not file a Married Filing Separately tax return (unless they meet the criteria in section 1.36B-2T(b)(2) of the Temporary Income Tax Regulations, which allows certain victims of domestic abuse and spousal abandonment to claim the premium tax credit
Cannot be claimed as a dependent, and
Premiums are paid for that month
Generally, married individuals who receive advance credit payments cannot use the Married Filing Separately status unless those individuals meet the criteria in temporary regulation section 1.36B-2T(b)(2), which allows certain victims of domestic abuse and spousal abandonment to claim the premium tax credit using the Married Filing Separately filing status. The temporary regulations define domestic abuse to include physical, psychological, sexual, or emotional abuse, including efforts to control, isolate, humiliate, and intimidate, or to undermine the victim’s ability to reason independently. All the facts and circumstances are considered in determining whether an individual is abused, including the effects of alcohol or drug abuse by the victim’s spouse. The temporary regulations also provide that a taxpayer is a victim of spousal abandonment for a taxable year if, taking into account all facts and circumstances, the taxpayer is unable to locate his or her spouse after reasonable diligence. Taxpayers may not qualify for relief from the joint filing requirement for a period that exceeds three consecutive years. More information about the use of MFS status is available on the IRS website.
Also, if they qualify, married individuals may claim the premium tax credit using the Head of Household filing status because for tax purposes they are treated as unmarried.
Married individuals who use the MFS status but do not meet the criteria in the temporary regulation must repay all of the advance credit payments made on their behalf, subject to a repayment cap.
Generally, to be an applicable taxpayer, the taxpayer’s household income must be no less than 100% of the FPL. However, under a special rule, individuals who have at least one family member who is an alien lawfully present in the United States but not eligible for Medicaid, are treated as applicable taxpayers even if they have income below 100% of the FPL. In addition, individuals who receive advance payments of the premium tax credit but then have household income that falls below 100% of the FPL at the end of the year, typically because of a change in circumstance, will still be treated as applicable taxpayers.
A key point to remember is that:
Many people already have qualifying health insurance coverage (called minimum essential coverage), such as coverage through their current employers. If they have other minimum essential coverage, they do not qualify for coverage subsidized by the PTC.
Please remember that coverage subsidized by the premium tax credit is available only to those who are not eligible for other minimum essential coverage, such as through an employer.
I can now provide some more detail on some new terminology that is part of the Affordable Care Act. I am going to talk about this briefly and there is a glossary of new terms at the end of this presentation for your future reference.
Minimum Essential Coverage is qualified health coverage and includes employer plans and government sponsored programs. We discuss this in more detail in our presentation on the Individual Shared Responsibility Provision and on our website.
Affordability becomes a consideration only when an employer offers coverage. The affordability test looks at the cost of the lowest-cost minimum value self-only coverage offered by the employer and compares that cost to the individual’s household income.
For this purpose, coverage for an individual or a family is affordable if the annual premium for the lowest-cost employee self-only coverage does not exceed 9.5 percent of household income (adjusted to 9.56 percent for plan years beginning in 2015 – see Revenue Procedure ). The definition specifically uses self-only coverage and does not consider the additional premium cost for family coverage.
This definition introduces two additional new terms: Minimum Value and Household Income.
Minimum Value is provided when an employer-sponsored plan covers at least 60 percent of the total allowed costs of benefits.
Household Income, for the purpose of the premium tax credit, is the Modified Adjusted Gross Income (MAGI) of the taxpayer and the taxpayer’s spouse, plus the MAGI of all the dependents in the tax household who are required to file a tax return.
Modified Adjusted Gross Income includes the adjusted gross income from the federal income tax return, plus any excluded foreign income, non-taxable Social Security benefits (including tier 1 railroad retirement benefits), and tax-exempt interest received during the taxable year. MAGI does not include Supplemental Security Income (SSI).
You should note that the definition of household income for the premium tax credit differs slightly from the definition as it is applied to the Individual Shared Responsibility Provision, which does not include non-taxable Social Security (or railroad retirement benefits) income in MAGI.
Okay – let’s get back to discussing eligibility for the credit and the income requirements.
The income requirements for the premium tax credit are based upon the “federal poverty guidelines” (sometimes referred to as the “federal poverty line” or FPL) and the location and size of the family. HHS determines the FPL amounts at the beginning of each calendar year and publishes them in the Federal Register. HHS also posts this information on their website. 
The federal poverty line amounts that are in effect on the first day of the open enrollment period determine income eligibility for advance payments of the premium tax credit for the entire coverage year (including special enrollment periods) and for the premium tax credit claimed on the tax return. Therefore, the 2013 FPL was used to determine eligibility for the advance credit payments for the initial enrollment period that began on October 1, 2013 and will be used in determining the premium tax credit on the 2014 returns that are filed in 2015. 

20. 2014 Income Limits Based on 2013 Federal Poverty Line (FPL)
One Individual:
$11,490 (100% FPL) - $45,960 (400% FPL)
Family of Two:
$15,510 (100% FPL) - $62,040 (400% FPL)
Family of Four:
$23,550 (100% FPL) - $94,200 (400% FPL)
Example: Based on the 2013 FPL, a family of four could have a household income up to and including $94,200 and still be eligible for the PTC.
The basic PTC income limits for 2014, based on the 2013 FPL, are:
For one individual $11,490 (100%) up to and including $45,960 (400%)
For family of two $15,510 (100%) up to and including $62,040 (400%)
For family of four $23,550 (100%) up to and including $94,200 (400%)
The government will not use the 2014 federal poverty line until the second open enrollment period beginning in November 2014 when determining eligibility for 2015 advance credit payments. 
So, individuals and families who make between 100 percent up to and including 400 percent of the FPL for the year may be eligible for the premium tax credit.
For example, the federal poverty line for determining eligibility for the premium tax credit in 2013 for a family of four living in Washington, DC, is $23,550. That means the family of four could have household income of up to and including $94,200, which is 400% of $23,550, and be eligible for the premium tax credit.

21. Key Considerations Advance credit payments are optional.
Reconciling advance credit payments is required and a tax return must be filed.
Differences between advance credit payments and the credit are likely.
Changes in circumstances can affect the PTC amount.
I previously mentioned the options to “Get it now” or “Get it later.” The “Get it now” option allows individuals to have advance payments of the premium tax credit sent directly to their insurer. As part of the enrollment process, the Marketplace makes the determination whether or not an applicant is eligible for advance payment of the premium tax credit and the maximum amount. But it is the applicant who chooses whether to receive advance credit payments and how much to receive in advance.
Individuals should bear in mind that there are several important considerations involved with the choice to receive advance credit payments:
Advance credit payments are optional.
Advance credit payments must be reconciled with the credit.
Differences between advance credit payments and credit are likely.
Changes in circumstance can affect the differences.
Individuals must file a tax return to reconcile these differences and to claim the credit.

22. Changes in Circumstances Can Affect the Credit
Eligibility for the PTC - even if not previously eligible
Amount of the premium tax credit
Report changes to HealthCare.gov or state marketplace website promptly
Because of the need to reconcile advance credit payments with the premium tax credit and the fact that the difference between the amount of the advance payments and the credit can be substantial, it is important that individuals understand the effect that changes in circumstances during the year can have on the premium tax credit.
Changes in circumstances can directly affect eligibility for the premium tax credit, the amount of advance credit payments, and the amount of the premium tax credit.
Reporting changes promptly will help ensure receipt of the proper amount of advance payments of the premium tax credit
Reporting changes will help ensure receipt of the proper amount of advance payments of the premium tax credit

23. Major Changes in Circumstances
Birth or Adoption
Marriage or divorce
Increases or decreases in number of dependents
Moving to another address
Increase or decrease in your income
Gaining or losing health care coverage or eligibility
Changes in filing status
Note: For additional examples of life events go to Healthcare.gov
Individuals purchasing health insurance at the Marketplace should report changes such as these to the Marketplace. A more comprehensive list is available in a Health Care Tax Tip on IRS.gov and on the HealthCare.gov site. In addition, we have a one-page electronic flyer, Publication Report changes to the Marketplace as they happen, that addresses the topic of reporting changes in circumstances.
Taxpayers should report these changes to the Marketplace as soon as possible either online or by phone to adjust the amount of their advance credit payments.
Here’s a key concept:
If receiving advance payments of the premium tax credit, the greater the change (and the longer time taken to report it) the more significant the difference will be between the advance payments and the allowable credit.
So it’s important for someone who chooses the “get it now” option to report important life changes promptly to avoid a potential unpleasant surprise at tax filing time.
You may want to think of this like you would about withholding and estimated tax payments. The better the original estimate and the faster the insured adjusts that estimate for changes the more likely the amount withheld or paid will be closer to the actual amount owed at the time of filing. And, if the actual credit is likely to be more than advance credit payments clients may decide that the additional funds could be better used to reduce monthly premium payments rather than waiting until tax time.
While caps limit the amount of excess advance credit payments that must be repaid, the caps do not apply to all situations and any repayment or reduction in refund could be an unwanted surprise at tax time.
FOR SPEAKER REFERENCE:
As I mentioned, if you find during the reconciliation process that the actual premium tax credit is less than advance credit payments, the difference, subject to certain caps, will be additional tax that may reduce your refund or add to your balance due.
So what are those repayment “caps” and how is that amount figured? Any repayment due from a taxpayer with income under 400% of the FPL is limited by a cap.
The caps range from $600 for all other taxpayers, including Head of Household filing status, with household income under 200% of FPL to $2,500 for all other taxpayers with household income above 300% but less than 400% of FPL. These amounts, plus the caps ranging from $300 to $1,250 for single individuals.
You should be aware that for taxable years beginning after December 31, 2014, the limitation amounts may be adjusted to reflect changes in the consumer price index, which means that they may change for 2015 and beyond.
The result of adjusting the amount of advance credit payments will be realized at tax time, so what will the process be for filing a return, claiming the premium tax credit and reconciling advance credit payments?

24. What Information Document Will an Individual Receive?
Form 1095-A (Health Insurance Marketplace Statement) will be issued by the Health Insurance Marketplace
Sent by January 31
Shows:
Documentation of coverage by month
Premiums, and
Advance payments of PTC
As I mentioned previously, the Marketplace will send an information document, Form 1095-A, (Health Insurance Marketplace Statement) showing the amount of an individual’s premiums and advance credit payments by January 31 of the year following the year of coverage. Although the form will be new, the concept is similar to the Form 1099-INT and the W-2.
For example, the tax filer or responsible adult will receive the 2014 information return by Jan. 31, 2015, and can use this information to compute the premium tax credit on the 2014 tax return and to reconcile the advance credit payments made on that person’s behalf with the amount of the premium tax credit. Certain employers, government agencies, and insurers will report non-Marketplace coverage information to the IRS and taxpayers starting January 2016 for the 2015 coverage year.
An individual who does not receive the Form 1095-A from a Marketplace should contact the Marketplace to receive a copy of the Form 1095-A.
Coverage and advance credit payment information from the Form 1095-A will be entered onto the Form The Form 8962, but not the Form 1095-A, will be submitted with the tax return.

25. What’s on PTC Form 8962 Annual & Monthly Contribution
PTC Claim & Reconciliation
Repayment of Excess of Advance Payment
Shared Policy Allocations
Alternative Calculation for Marriage
The draft Form and instructions should be available soon. 
The Form 8962 will be used to:
Claim the premium tax credit regardless of whether any advance credit payments were made, and
Reconcile advance credit payment amounts.
The draft form will have the following sections.
Annual & Monthly Contribution - You will use this part to do some of the basic calculations needed to determine eligibility to claim PTC such as family size, MAGI, total household income, and FPL.
PTC Claim & Reconciliation – You will complete the annual and monthly calculations here as well as reconcile advance credit payments made, using the information from Form 1095A.
 Repayment of Excess of Advance Payments – You will use this part to determine if an excess amount of advance credit payments were made on the taxpayer’s behalf.
Shared Policy Allocations –If advance credit payments are made for one or more tax families enrolled in the same plan the premiums for that plan must be allocated. I’ll refer you to the instructions for this part of the form because this is beyond the scope of today’s presentation.
Alternative Calculation for Marriage – This section is for married individuals who were single for a portion of the year. Again, I’ll refer you to the form instructions if you encounter this circumstance.
There will be new lines on the Form 1040 series returns for claiming the premium tax credit and for the repayment of excess advance payments of the premium tax credit.

26. How Does Reconciliation Work?
Advance payments $4,000
Calculation of PTC $3,000
Difference $1,000
Repayment amount = $1,000 *
*Amount from Form 8962 that would be entered on
Form 1040 (may be subject to a repayment cap)
Note: A tax return must be filed to reconcile advance credit payments regardless of any other filing requirement.
Let’s go over a simple example to demonstrate the basic principle of how reconciliation will work.
Say the Form 1095-A shows advance credit payments totaling $4,000 and the calculation of the premium tax credit on Form 8962 shows a credit of $3,000. The difference, $4,000 minus $3000, equals $1,000. Therefore, $1,000 is the excess amount to be repaid. The repayment amount, from the Form 8962 computation, is transferred to the income tax return. This amount may be subject to a repayment cap which will be discussed later in the presentation.
Remember, if any advance credit payments were received, a tax return must be filed to reconcile the advance payments with the premium tax credit regardless of any other filing requirement.
A tax return must be filed and advance payments must be reconciled with the premium tax credit. Failure to reconcile advance credit payments may affect qualification for advance payments in the next enrollment year.
A question that may be on your mind is; What if an extension to file the tax return is submitted? How might that affect advance credit payments for the next year?
Even if they receive advance credit payments, taxpayers can request an automatic extension until Oct. 15. However, the IRS and HHS will share information in late September. If a taxpayer has not yet filed, the lack of IRS verification of reconciliation may affect the determination by HHS of eligibility for advance credit payments in the following year.

27. What are Repayment Caps?
36B Advance Repayment Limitations
Household Income (as % of Federal Poverty Line)
Single Filing Status
Any Other Filing Status
Less than 200%
$300
$600
At least 200% - less than 300%
$750
$1,500
At least 300% - less than 400%
$1,250
$2,500
400% or more
N/A
As I mentioned, if you find during the reconciliation process that the actual premium tax credit is less than advance credit payments, the difference, subject to certain caps, will be additional tax that may reduce your refund or add to your balance due.
So what are those repayment “caps” and how is that amount figured? Any repayment due from a taxpayer with income under 400% of the FPL is limited by a cap.
The repayment caps are shown in the chart and range from $300 to $1,250 for single individuals. For all other taxpayers, including those with Head of Household filing status, the repayment caps range from $600 to $2,500.
You should be aware that for taxable years beginning after December 31, 2014, the limitation amounts may be adjusted to reflect changes in the consumer price index, which means that they may change for 2015 and beyond.
The slide shows another example of the reconciliation but this time the repayment is subject to a cap.
Let’s say we have a single taxpayer with no dependents and household income for 2014 of $43,560, which is 390 percent of the federal poverty line.
The taxpayer’s premium tax credit for 2014 is $1,062, but the advance credit payments that she received in 2014 totaled $2,952. The taxpayer has excess advance credit payments of $1,890. (2,952 minus 1,062 = 1,890)
However, because her household income is between 300 percent and 400 percent of the federal poverty line the repayment is capped at $1,250.
For future reference, there are several other examples of repayment caps using various scenarios in the final regulations.
You should note that there is no “cap” or limitation on income of 400% or above, so the entire amount of the advance credit payments would have to be repaid. In this example, if the actual income rises to above 400%, then the repayment would increase to $2,952.
One question we have received is whether the repayment amount that exceeds the cap is taxable income to the taxpayer? No, the excess is not considered taxable income. The repayment cap constitutes the amount that is legally due from the taxpayer.
Again, the final regulations have much more on repayment rules.

28. Premium Tax Credit Example
Ervin is single and had household income of $28,725
FPL for single: $11,490 – 100%
$28,725/$11,490 = 250% (.0805)
$28,725 x = $2,312 (Ervin’s Share)
Ervin enrolled in health plan with premium of $5,000
Benchmark premium plan – $5,200
$5,200 - $2,312 = $2,888 PTC
2014 Regional Meeting - Phoenix

29. Net PTC and Repayment of Excess Advance PTC
Form 1040
2014 Regional Meeting - Phoenix

30. Premium Tax Credit Summary
Refundable credit for only eligible individuals
Get it Now (advance credit payments) or Get it Later (without advance credit)
Report changes in circumstances
Advance credit payments must be reconciled
Everyone who receives this credit must file a tax return
Use form 1095A, Form 8962 and Form 1040
Well I know that was a lot of information in a short period of time, so let me just use this slide to summarize the main points before I give you some more resources for the topic and then open this session up for questions.
The premium tax credit is:
A refundable credit
For eligible individuals only – those with incomes between 100, up to, and including 400 percent of the federal poverty line who purchase coverage from the Marketplace and meet all other eligibility requirements.
Individuals can “Get it now” in the form of advance credit payments or “Get it later” by claiming the credit on their federal tax returns to the extent they have not received advance credit payments.
It is important to report changes in circumstances to avoid surprises at tax time.
Those who use the “Get it now” option to receive advance payments of the credit must reconcile the advance payments with the credit amount on the federal income tax return.
To reconcile advance credit payments and claim the credit individuals will use Form 1095A, Form 8962 and the individual income tax return.

31. ACA Intake Questions

32. TaxWise Worksheet 8

33. What Do Taxpayers Need? For all taxpayers:
Type of health insurance for themselves, their spouse, and their dependents
For taxpayers who do not have insurance for themselves, their spouse, and/or their dependents:
Income information for themselves, their spouse, and their dependents
Exemption Certificate Number of any Marketplace-granted coverage exemptions for themselves, their spouse, and their dependents

34. What Do Taxpayers Need?
For taxpayers who acquired health insurance through the Marketplace for themselves, their spouse, and/or their dependents
Form 1095-A, Health Insurance Marketplace Statement
Income information for themselves, their spouse, and their dependents
Note: If a dependent on your return is covered on another taxpayer’s policy, or if someone on your policy is claimed as a dependent on another taxpayer’s return, you may need information from the other taxpayer’s return and/or Form 1095-A.
Well I know that was a lot of information in a short period of time, so let me just use this slide to summarize the main points before I give you some more resources for the topic and then open this session up for questions.
The premium tax credit is:
A refundable credit
For eligible individuals only – those with incomes between 100, up to, and including 400 percent of the federal poverty line who purchase coverage from the Marketplace and meet all other eligibility requirements.
Individuals can “Get it now” in the form of advance credit payments or “Get it later” by claiming the credit on their federal tax returns to the extent they have not received advance credit payments.
It is important to report changes in circumstances to avoid surprises at tax time.
Those who use the “Get it now” option to receive advance payments of the credit must reconcile the advance payments with the credit amount on the federal income tax return.
To reconcile advance credit payments and claim the credit individuals will use Form 1095A, Form 8962 and the individual income tax return.

35. ACA Resources VITA/TCE Materials Publication 5157
Publication 4012, ACA Tab
Form 8965 and Instructions
Form 8962 and Instructions
Publication 974
Some of the main resources you should start with for more information about the premium tax credit are:
IRS.gov/aca has a main premium tax credit page as well as a question and answer page. The page links to news releases, multimedia, legal guidance page and health care tax tips.
Three specific PTC pubs I want to mention, which will be useful to educate your clients are:
5120, Facts about the Premium Tax Credit; Your Credit, Your Choice – Get it Now or Get it Later,
5121, Facts about the Premium Tax Credit; Need help paying for health insurance premiums?, and
5152, Report changes to the Marketplace as they happen
These publications are also available in Spanish
IRS has a series of video’s on the IRS YouTube channel, featuring IRS Commissioner John Koskinen discussing the premium tax credit.
Healthcare.gov or state Marketplace website for information health care coverage enrollment and how to get the appropriate financial assistance, including advance payments of the premium tax credit.

36. ACA Web Resources HealthCare.gov IRS.gov/ACA
Just remember, these are the primary ACA web resources for the Affordable Care Act.
IRS.gov/ACA contains the latest information on the tax provisions included in the Act.
HealthCare.gov contains information health care coverage enrollment through the Health Insurance Marketplaces, and how to get the appropriate financial assistance, including advance payments of the premium tax credit.