AnchorStarting October 1, 2013 as part of the Affordable Care Act, Americans will have the opportunity to compare and enroll in health exchanges available in their state, which will take effect January 1, 2014. North Carolina is one of the states that declined to develop a state-run health insurance exchange. Instead, the federal government is slated to manage the North Carolina health exchange market.
Under the Affordable Care Act, all Americans are required to show proof of health insurance. If an individual does not have coverage available through their employer and has not purchased an individual policy for themselves, they need to participate in a health exchange. Monthly premiums for these exchanges are confidential until October. However, the government has released the shared responsibility payment amounts that are imposed monthly on all Americans who fail to secure minimal essential health insurance. (Read examples here in Part 1 provided by the IRS to learn how payments are calculated. Read about Employer Shared Responsibility Payments.)
What is minimal essential coverage? Coverage is recognized for an entire month as long as an individual “is enrolled in and entitled to receive benefits under a program or plan that is minimum essential coverage for at least one day during the month.” This means if an individual secures coverage on January 31, they will not have to pay a shared responsibility payment for the month of January. These shared responsibility payments are calculated based on an individual’s:
- Age. There are special applicable amounts for individuals under the age of 18.
- Marital status. According to the Department of the Treasury, married couples “who file a joint return for a taxable year are jointly liable for any shared responsibility payment.”
- Income. Computations involve excess income amounts and income percentages.
- Dependents. Non-custodial parents who are ordered to provide health insurance coverage for dependent children through a separation agreement or divorce are liable for the shared responsibility payments attributable to their child. Tax attorneys and accountants can also review the requirements for the parents of adopted children and parents placing a child for adoption.
According to the North Carolina Institute of Medicine, more than 1.5 million individuals in North Carolina under 65 are without insurance. The federal computation methods for determining the shared responsibility payments are complex and taxpayers should consult a tax attorney or certified public accountant to learn about their tax liability.
Learn how to avoid the many health care exchange scams in North Carolina.