Anthony Sykes & Company

         A Health Reimbursement Arrangement ( HRA ) is a plan set up by a business to cover the qualified medical expenses such as prescription medications, physical exams, care from a psychologist or psychiatrist, and more. They are a tax deduction for the employer and tax free for the employee. In our last post, we mentioned that January 2020 would mark a big change in how HRA ’s could be administered.           Next year, a new type of HRA can be offered and used to buy health insurance inside or outside the Affordable Care Act marketplace. Another option that is available applies to companies that continue to offer group health insurance. They can offer an excepted benefit HRA , which would reimburse employees up to $1,800 for qualified medical expenses. If an employee were to decline group coverage and only go with the HRA , they could only use it for expenses, short term insurance and premiums. ...

Starting in January of 2020 , California will require all residents to have basic health insurance. The bill passed in the California Assembly is called the California Health Care Coverage Shared Responsibility Act. This “Individual Mandate” is like what was seen in the Affordable Care Act. There will be a fine for individuals who do not secure health coverage. This can be applied based on the number of months, or the size of the household. One big difference with this requirement is that the Franchise Tax Board ( FTB ) will not fine employers who do not offer health care to their employees. The fines that are collected will help to create subsidies for those who have difficulties paying for the insurance. These individuals must meet certain specific criteria. Members of Native American tribes and those who receive certificates of exemption will not be required to be a part of this program. The FTB will administer the program and any penalty will be reported on, and paid with,...

          It has now been made official. The IRS will NOT accept Federal Tax Returns that do not answer the questions about health coverage under the Affordable Care Act. This change in policy will go into effect next year, for the upcoming Tax Season. This is a significant move on the part of the IRS.           In the past, this requirement had been something of a gray area. Due to a variety of factors, the IRS has been processing Tax Returns where individuals have not shown that they have health coverage. However, they would still apply a penalty to these Taxpayers. Even so, in these situations a Tax Refund would still be issued, a little later than most. That will no longer be the case. As it stands, the ACA is still in place, and the IRS will apply its obligations under the law to all Taxpayers. Even if it means suspending or rejecting the processing of a Tax Return until it gets an answe...

The IRS has stated that filling out line 61 on Federal Tax Returns is no longer required. What is the significance of this 1 line? This was the line that was added due to the Affordable Care Act ( Obamacare ) and its requirement that all carry health coverage. In the past, if the answer was “No”, there would be a penalty given. If an answer was not given, it would be considered a “silent return” and rejected.           All returns filed this year will be treated differently. Taxpayers may continue answer the question, but if they do not, their returns will continue to be processed. This is most likely due to an Executive Order signed on the first day of the Trump administration. Keep in mind that the Affordable Care Act is still in effect and any Returns that withhold information from Line 61 could still be penalized at a later date.