Tax Analysts provides news, analysis, and commentary on tax-related topics, including the latest developments affecting healthcare taxation. The Affordable Care Act, also known as Obamacare, instituted insurance market reforms and created new requirements for individuals to have minimum essential coverage for each month during the year or pay an individual shared responsibility payment.

The section 5000A payment, often called the individual mandate, was upheld as a tax by the Supreme Court in National Federation of Independent Business v. Sebelius, 132 S. Ct. 1161 (2012).

The ACA also requires employers with 50 or more full-time employees to offer healthcare coverage. These employers, called applicable large employers, are subject to the employer shared responsibility payment under section 4980H if they fail to offer coverage.

Individuals that do not have employer-sponsored healthcare can purchase health insurance through health insurance exchanges. Eligible individuals purchasing health insurance through an exchange may receive premium tax credits under section 36B.

These tax subsidies offset health insurance premiums for coverage purchased through the exchanges. The Supreme Court is considering in King v. Burwell, Sup. Ct. Dkt. 14-114 (2014) whether IRS the section 36B credits are restricted to individuals that purchased health insurance through a state-established exchange.

Some individuals are exempt from the requirement to purchase healthcare and can claim this exemption when filing their annual federal income tax return.

Several states opted to accept federal money to expand Medicaid to offer free or low-cost healthcare coverage to individuals with income below certain levels. Under the Medicaid expansion, the federal government pays 100 percent of Medicaid costs for the expansion from 2014 through 2016.

The IRS has released detailed information reporting regulations under sections 6055 and 6056 that require employers to report coverage offered to employees and dependents.

The IRS is currently working on regulations on the section 4980I excise tax on high-cost employer sponsored health coverage. The section 4980I excise tax, commonly called the “Cadillac” excise tax, becomes effective in 2018.