As you know, the Affordable Care Act (ACA) prohibits health insurers from denying individuals coverage based on pre-existing conditions or family histories. However, this was a major concern for lawmakers and insurers because they feared taxpayers would wait until they got sick to purchase health insurance. However, to stay in business, they must collect more money than they pay out. This is where the individual shared responsibility provision comes in.
What is the Individual Shared Responsibility Provision?
Individual Shared Responsibility
Employers, insurance companies, and individuals are all responsible for keeping health insurance coverage affordable and available. The individual shared responsibility provision is a guideline for the individual’s responsibility and role in ACA. It states that individuals must carry health insurance, receive an exemption, or pay a hefty penalty. This penalty is a federal tax referred to as the shared responsibility payment.
Shared Responsibility Payment
If you employees are not covered by minimum essential coverage, they will need to pay the shared responsibility payment. The amount they owe will depend on several factors:
- Number of uninsured individuals in the household during the previous calendar year.
- Are the insured children?
- How long have you and your dependents been uninsured?
- Total income of your household
Avoid The Shared Responsibility Penalty
Your employees can avoid the shared responsibility penalty by carrying minimum essential coverage. This includes the health care plans provided by your business, health insurance provided by government programs, and health-care exchanges.
2018 Tax Season
As most of you are aware, the individual mandate has been repeal for the upcoming year, but your employees will still need to report coverage for 2017. Help to inform your employees about changes in regulations and what is expected of them this tax season. Remind them that if they did not carry insurance during the previous year they will face substantial penalties.
ACAWise Your Reporting and Compliance Solution
Don’t be lulled into a false sense of security. Despite the ongoing efforts to “repeal and replace” the controversial Affordable Care Act, it is still required by law and those who ignore their responsibilities will face severe consequences.
Choose ACAwise to handle your company’s ACA reporting and compliance. Getting started is easy, and, with volume-based pricing, you will get the best deal available! Explore all ACAwise has to offer with a free demo. Get to know one of our knowledgeable product managers and learn how we can help you smoothly file your 1094 and 1095 Forms.