After putting another tax filing season on the books, I want to pause for a moment and reflect on several important themes that defined TY14 tax administration and touched millions of taxpayers. Perhaps not surprisingly, the themes are the Affordable Care Act (ACA), taxpayer identity fraud, and economic security. In this post, I’ll address healthcare.
Recap: For a majority of taxpayers it was smooth first go-round, but some process details are still being ironed out and many people are still coming to grips with the increasing complexity of health care financial decisions.
For the vast majority of tax filers, approximately 8 out of 10 households, complying with the ACA reporting requirement on health insurance coverage was a simple “check-the-box” process to report that they had full-year coverage. Though most people had little trouble, millions of taxpayers did face an ACA mandate penalty or required exemptions. Despite predictions of disaster, the IRS anticipated many of the challenges taxpayers would face and built systems that made the process as simple as they could. Both IRS and CMS have shown a great willingness to be flexible in their implementation plans to ensure that taxpayers can comply.
For the average citizen, though, healthcare is now something to which more attention must be paid. As employers move toward more high-deductible plans coupled with Health Savings Accounts, taxpayers are necessarily being drawn into many more health care financial choices than they had previously confronted – choices that can also affect tax liability.
Next year will be another year of transition, as additional ACA requirements roll out and taxpayers become more used to the law’s requirements. The wild card will be the Supreme Court’s decision in King v. Burwell, which could, once again, change the rules. More to come….