October 28, 2013


Obama made it church and the golf course this weekend!  It was the first time since Easter that he darkened the door of a church (no racist pun intended) and the 37th time this year he hit the links.

Unless you just awakened from a coma, you are well aware of the glitches in Obamacare's gargantuan system.  I am not an expert in any facet of the health care law, but I am somewhat involved in my company's benefits program, so I try to stay educated.

Our insurance agent invited me to attend a luncheon seminar last week, in which the guest speaker was an expert, a lawyer in the Chief Counsel's office of the IRS.   Guess what?  He isn't a fan of the law, not necessarily because of any political opinion he professed, but because of the glaring and numerous contradictions, omissions and duplications in the law.  Most of the other people taking part in the seminar were benefits specialists and tax professionals.  They asked very technical, very smart questions.  It was entertaining, in a morbid kind of way.

Without going in to the infinite rules and procedures, I will try to summarize one of the looming scenarios:

First, the Obamacare subsidies to aid those who can't afford to comply with the individual mandate are given in the form of a tax credit.  And, unlike any other tax credit before it, this one can be granted in advance for the coming year.  Or something like that.

The employer mandate, which has already been delayed a year, depends upon reporting.  Employers have to report to their insurance company and the IRS information such as; number of full time employees, types of coverage offered and the employee's share of the premium of the lowest priced plan offered. 

In turn, the insurance companies must report to the IRS the same information above, as was reported to them by the employer, as well as their records of coverage and cost.

The IRS will review the reports.  Maybe.  The whole penalty thing for employers, once in force, is only triggered if an employee shops for insurance in an 'exchange/marketplace' AND applies for a tax credit to help pay for it.  So, the IRS might only be reviewing the reports of companies with potential penalties, or they might be reviewing everyone.  Even the IRS doesn't know at this point.  If they do review and find a potential penalty is due, they notify the employer and there is a period of time for the employer to respond.

Thing is, the IRS won't know if an employee has had to seek insurance on the exchange until they apply for the tax credit.  And that is done on their individual tax return.  Keep with me here.

Employer mandate effective 2015.

Employee taxes filed, due April 15, 2016 or as late as October with routine extension. 

IRS compares return information with reports that are reviewed 'later in the year', so let's say the IRS performs miracles and can do it by December 2016.

Notification and response period, hell, I don't know, another six to eight months?  August 2016. 

First potential payments of penalties from corporations, maybe, just maybe, by the end of 2016.

In the meantime, the individual mandate and its associated tax credits are in effect January 1, 2014.  Just over two months from today, and nearly three years from when we can expect penalty payments to begin rolling in.

Who in the hell is footing the bill for all those advance tax credits in the meantime?

1 comment:

KatWA55 said...

I'm a tax person and we're not happy about the govt using us as unpaid labor for their scheme.