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Regulation and Compliance > Federal Regulation > IRS

IRS ties up PPACA loose ends

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The Internal Revenue Service (IRS) has published a number that will cap the new penalty on the uninsured at $2,448 per person for 2014, or up to $12,240 per family.

The IRS set the maximum “individual shared responsibility payment” maximum by reporting that the average monthly premium for individual bronze-level coverage is $204 per month. The maximum monthly national average bronze plan premium — for a “shared responsibility family with five or more members” — is $1,020, the IRS says in Revenue Procedure 2014-46.

The Patient Protection and Affordable Care Act (PPACA) now requires many people to have “minimum essential coverage” (MEC), or else pay a penalty for each month in which they lack MEC.

For 2014, PPACA sets the penalty for an individual at $95 or 1 percent of income, whichever is greater. For taxpayers with high incomes, PPACA caps the penalty at the average cost of bronze-level coverage. The cap means that an affected individual taxpayer will owe the 1 percent 2014 uninsured penalty on income up to $244,800 per year. A family could owe the penalty on income up to $1,224,000.

The IRS posted the revenue procedure along with a package of final, temporary and proposed PPACA regulations and two more sets of PPACA guidance:

Rules Regarding the Health Insurance Premium Tax Credit (RIN 1545-BM23) - This regulatory package, and a companion IRS rulemaking notice, explain what taxpayers should do when matters such as divorce, child custody decisions and spousal abuse affect PPACA health insurance subsidy premium tax redits. Another section explains what low-income self-employed people should do if they are eligible both for a self-employed taxpayer health insurance premium deduction and PPACA health insurance premium subsidy tax credits.

Revenue Procedure 2014-37 provides indexing adjustments for the “applicable percentage table.” A taxpayer can use the table to calculate PPACA health insurance premium subsidy tax credits. The notice also updates a “required contribution percentage” that taxpayers can use to determine whether the government thinks of them as being eligible for affordable employer-sponsored MEC.

Revenue Procedure 2014-41 gives a specific method a taxpayer can use to reconcile the health insurance premium tax deduction for the self-employed with the PPACA health insurance premium subsidy tax credit


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