Saturday, October 18, 2014
Premium Tax Credit Problems
Two of three recent federal court rulings held that the premium tax credit (PTC) is only available to individuals obtaining coverage through their state exchange, not the federal exchange. This is a big deal because the PTC serves to help make health insurance affordable to individuals with income between 100% and 400% of the federal poverty line. Also, the majority of states did not create their own exchange, forcing individuals in need of insurance to go to the federal exchange (if they are eligible for a PTC).
Resolution of this big issue likely won't happen until next year. Meanwhile, the upcoming filing season will involve millions of individuals having to reconcile the PTC they may have received in advance, with their true amount. There is also a lot of complexity for practitioners too. Another key piece of the Affordable Care Act that comes into play in 2014 is the individual mandate. How many people are subject to it will also depend on the outcome of the PTC litigation.
I've got a short article in this week's AICPA Tax Insider on the three cases and the relevance to individuals and employers. I hope you'll take a look.
What do you think?