Individual mandate hardship exemption expanded

BY DAYNA E. ROANE, CPA/ABV, M.TAX.

In December, the U.S. Department of Health and Human Services expanded hardships eligible for exemption from the Sec. 5000A shared-responsibility payment to include individuals whose policies were canceled by their previous insurers and who find that other coverage options are more expensive than their canceled policies.

The shared-responsibility payment, popularly known as the “individual mandate” of health care coverage under the Patient Protection and Affordable Care Act (PPACA), P.L. 111-148, also provides a wide range of other hardships and taxpayer groups and circumstances qualifying for exemption (see “Tax Practice Corner: Calculating the Health Care Individual Mandate Penalty,” Jan. 2014, page 54).

A taxpayer whose policy was canceled for any reason and who feels that procuring a different policy is unaffordable may now apply for a hardship exemption on the grounds that it is more expensive to buy a different plan. Such taxpayers are permitted to buy “catastrophic coverage” plans rather than PPACA-compliant health plans in 2014. A taxpayer who wishes to apply for this exemption must fill out a hardship exemption form and provide supporting documentation indicating that the previous policy was canceled. “Unaffordable,” in this case, does not refer to a health insurance policy whose premiums for self-only coverage exceed 8% of household income (a statutory exemption), but is measured with respect to the taxpayer’s canceled policy’s premium costs. The exemption may be granted by a health insurance exchange.

  Department of Health and Human Services, “Options Available for Consumers With Cancelled Policies” (Dec. 19, 2013), available at tinyurl.com/mk7chhl

By Dayna E. Roane, CPA/ABV, M.Tax., Perry & Roane PC, Niwot, Colo.

SPONSORED REPORT

Revenue recognition: A complex effort

Implementing the new standard requires careful judgment. Learn how to make significant accounting judgments and document them and collaborate with peers for consistent application.

VIDEO

How to Excel pivot a general ledger

The general ledger is a vast historical data archive of your company's financial activities, including revenue, expenses, adjustments, and account balances. J. Carlton Collins, CPA, shows how to prepare data for, and mine data with, PivotTables.

QUIZ

News quiz: Taking an economic snapshot and looking to the future

Recent news included IRS actions that affect individuals and partnerships and a possibly influential move by a Big Four accounting firm.Take this short quiz to see how much you know about the news.