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Self Employed & The Affordable Care Act

July 31, 2014
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WHAT THE SELF EMPLOYED NEED TO KNOW ABOUT INDIVIDUAL SHARED RESPONSIBILITY UNDER THE AFFORDABLE CARE ACT

A key part of helping to deliver the Affordable Care Act’s (the “ACA”) consumer protections at an affordable cost is its “individual shared responsibility provision”. When individuals wait to purchase health insurance when they are sick and then drop the coverage when they are well, or when individuals do not purchase health insurance at all, premiums for all consumers go up.

In January 2014, the individual shared responsibility provision will go into effect. It calls for each individual to have: 1.) basic health insurance coverage, also known as “minimum essential coverage”, for each month (has coverage for any one day of that month); 2.) qualify for an exemption, or 3.) make an individual shared responsibility payment when filing a federal income tax return. Individuals will not have to make a payment with their federal income tax return if coverage is unaffordable, if they spend less than three consecutive months without coverage, or if they qualify for an exemption for several other reasons. If you are self-employed in 2014 and earn less than four times the poverty level, you can qualify for government health care subsidies.

Self-employed persons count as small employers in Florida. Generally, small employers are those that employ 1-50 employees. If you are self-employed and have no other workers, you are considered to be a “group of one” under the ACA. Therefore, health care insurers are required to sell you at least a basic health care plan. If you are self-employed and have bought health insurance, the cost of the health insurance may be deductible from your federal taxes. Please contact a tax professional to discuss any tax consequences.

According to the Department of Treasury’s final regulations, “minimum essential coverage” includes, at a minimum, all of the following: 1.) employer-sponsored coverage (including COBRA coverage and retiree coverage); 2.) coverage purchased in the individual market; 3.) Medicare Part A coverage; 4.) Medicaid coverage; 5.) Children’s Health Insurance Program (CHIP) coverage; 6.) certain types of Veterans health coverage; 7.) TRICARE; and 8.) a hardship exemption (hardships include: individuals who the new Health Insurance Marketplace projects will have no offer of affordable coverage, individuals who face unexpected personal or financial situations that prevent them from obtaining health insurance, and individuals who would be eligible for Medicaid but the state they reside in chose not to expand that state’s Medicaid eligibility).

For more information about new benefits and opportunities to purchase health insurance coverage through the individual Marketplace, visit www.healthcare.gov.