by | ARTICLES, CONSTITUTION, FREEDOM, GOVERNMENT, OBAMA, OBAMACARE, POLITICS, TAXES
During oral arguments of the Burwell Obamacare case before the Supreme Court on Wednesday, a possible resolution seemed to rear its ugly head when Chief Justice Roberts questioned U.S. Solicitor General Donald Verrilli over the contested ambiguity of the application of Obamacare subsidies. Verrilli made the case that the “court should defer to the interpretation of the Internal Revenue Service, which said the tax credits apply nationwide.” This reasoning is absolutely the worst possible solution — but of course not entirely unexpected from the federal government.
The idea of “deference” refers “ to “Chevron deference,” “a doctrine mostly unknown beyond the halls of the Capitol and the corridors of the Supreme Court. It refers to a 1984 decision, Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., and it is one of the most widely cited cases in law. Boiled down, it says that when a law is ambiguous, judges should defer to the agency designated to implement it so long as the agency’s decision is reasonable.”
Given the current catastrophic state of the Internal Revenue Service, the courts must run from this idea as quickly as possible. The IRS has proven overwhelmingly in the last few years that no decision it makes is “reasonable” and therefore cannot be trusted as an unbiased, independent agency capable of carrying out a professional opinion on this or virtually any manner. IRS officials engaged in targeting of conservatives, “lost” official emails, mislead Congress and investigators about their existence, and corresponded with agencies such as the FBI, the House Oversight Committee, the DoJ, and the White House in 2509 documents over a multi-year period.
No wonder the federal government requests deference to the IRS to sort out the language and spirit of Obamacare subsidies. It’s like the fox guarding the hen house!
The IRS is no more capable of making such a determination in the first place as the FCC was in implementing net neutrality or the EPA rules changes on limiting carbon dioxide emissions. Agencies have repeatedly exceeded their statutory jurisdiction. SCOTUS would be wise to ignore this suggestion to put the onus back on the IRS to sort out the mess. The IRS has never answered satisfactorily for its repeated scandals, and therefore cannot be considered non-partisan or capable of any prudent judgment, via “deference”, at this time.
by | ARTICLES, BLOG, FREEDOM, GOVERNMENT, OBAMA, OBAMACARE, POLITICS, TAXES
Yesterday it was reported that the Treasury Department paid $3 billion to cover Obamacare cost-sharing subsidies without Congressional approval. The heart of the dispute appears to be whether or not these subsidies were supposed to be funded via yearly appropriations or not. The House Ways and Means Chair, Paul Ryan, argues the former. Health and Human Services, via the Department of Justice, argues the latter.
In order to make sense of the funding dispute, it seemed necessary to dig around in the agency budgets to see how cost sharing was accounted for. Cost-sharing falls under the purview of the “Centers for Medicare & Medicaid Services (CMS)”. Yet, while comparing the budget requests for 2014 (for which the Treasury covered costs) and the ones for 2015 (current) & 2016 (future), it became clear that CMS changed the way it accounted for cost-sharing funding after 2014.
Looking at the 2014 Budget request, CMS had section called “Mandatory Appropriations”, which listed three items: 1) Medicaid 2) Payments to the Health Care Trust Funds 3) Reduced Cost Sharing.
Further in that budget, CMS wrote, “The FY 2014 request for Reduced Cost Sharing for Individuals Enrolled in Qualified Health Plans is $4.0 billion in the first year of operations for Health Insurance Marketplaces, also known as Exchanges. CMS also requests a $1.4 billion advance appropriation for the first quarter of FY 2015 in this budget to permit CMS to reimburse issuers who provided reduced cost-sharing in excess of the monthly advanced payments received in FY 2014 through the cost-sharing reduction reconciliation process.”
This position — that Obamacare cost-savings was to be funded by yearly appropriations– was reiterated by a “July 2013 letter to then Sen. Tom Coburn, Congressional Research Service wrote that, “unlike the refundable tax credits, these [cost-sharing] payments to the health plans do not appear to be funded through a permanent appropriation. Instead, it appears from the President’s FY2014 budget that funds for these payments are intended to be made available through annual appropriations.” (Remember, a 2014 budget would have been written also in 2013)
You can see a picture of the 2014 budget here:
However, Congress rejected those requested appropriations at the time so “the administration went ahead and made the payments anyway.” That is the mystery $3 billion paid for by the Treasury.
There is a noticeable change, however, with the CMS budget for 2015. The cost-sharing portion, which was originally listed as “Mandatory Payments” in 2014, is not listed at a “Mandatory Payment” anymore. Nor is it for 2016 either.
2015 Budget request:
CMS Budget 2015
2016 Budget request:
CMS Budget 2016
Reading through the 2015 and 2016 budget documents, “cost sharing” appears in various areas, usually related to Medicaid, but not in one specific section — contrary to how it was accounted for in 2014, as a specific appropriation from the agency.
What’s equally interesting is that the DoJ argued about this specific matter in their recent brief dated January 26, 2015, saying that, “The House’s statutory arguments are incorrect. The cost sharing reduction payments are being made as part of a mandatory payment program that Congress has fully appropriated. See 42 U.S.C. § 18082. With respect to Section 4980H, Treasury exercised its rule making authority, as it has on numerous prior occasions, to interpret and to phase in the provisions of a newly enacted tax statute. See 26 U.S.C. § 7805(a).”
Yet, as shown above, the “mandatory program for cost-sharing”, that was submitted for funding (and rejected) in 2014, was removed entirely from the 2015 and 2016 budget requests. Now there is no way to even see the “cost-sharing” portion of the budget at all. And this appears to contract the statement by the DoJ that there is a “mandatory payment” program.
Cost sharing subsidies are an enormous part of Obamacare. “These payments come about because President Obama’s healthcare law forces insurers to limit out-of-pocket costs for certain low income individuals by capping consumer expenses, such as deductibles and co-payments, in insurance policies. In exchange for capping these charges, insurers are supposed to receive compensation.”
Cost sharing is expected to cost taxpayers roughly $150 billion over the next 10 years, according to estimates by the Congressional Budget Office.
But we now don’t know the specific funding amounts for the year 2015 or for 2016, and the costs for 2014 are in dispute, involving that $3 billion in funds from the Treasury (which came from somewhere and somehow).
The one thing we do know for certain: the Treasury Department is clearly exercising the power it perceives to have, as a “rule making authority, as it has on numerous prior occasions, to interpret and to phase in the provisions of a newly enacted tax statute.”
by | ARTICLES, FREEDOM, GOVERNMENT, OBAMA, OBAMACARE, POLITICS, TAXES
A few weeks ago, I reported how Obama’s budget contained a $22 billion student loan bailout to cover a massive shortage of funds for the Department of Education Federal Student Loan program. Because the program is categorized as a “credit program”, due to a “quirk in the budget process for credit programs, the department can add the $21.8 billion to the deficit automatically, without seeking appropriations or even approval from Congress.”
Now it is being reported that the Treasury Department approved and paid for $3 billion in Obamacare costs without seeking Congressional approval. Have we uncovered another similar quirk in the federal budget process that allows for the Treasury to cover Obamacare costs that aren’t funded? We don’t actually know yet, because the letter from the Treasury which “revealed that $2.997 billion in such payments had been made in 2014”, “didn’t elaborate on where the money came from.”
Here’s what’s going on:
“At issue are payments to insurers known as cost-sharing subsidies. These payments come about because President Obama’s healthcare law forces insurers to limit out-of-pocket costs for certain low income individuals by capping consumer expenses, such as deductibles and co-payments, in insurance policies. In exchange for capping these charges, insurers are supposed to receive compensation.
What’s tricky is that Congress never authorized any money to make such payments to insurers in its annual appropriations, but the Department of Health and Human Services, with the cooperation of the U.S. Treasury, made them anyway.”
So here we have two agencies collaborating on funding for Obamacare without Congressional approval. When asked about the $3 billion by House Ways and Means Chairman Rep. Paul Ryan, he received a letter which merely described the what the cost-sharing program was, without explaining anything 1) regarding how the payments came to be made, or 2) where the money came from.
What’s more, because the cost-sharing payments from the Department of Homeland Security is part of a larger lawsuit against Obama’s Executive Actions, filed by John Boehner, the letter referred Rep. Ryan to the Department of Justice.
It turns out that Department of Justice recently argued this topic on January 26th. In this brief the Department of Justice argued that John Boehner’s position, that the cost-sharing program payments required annual appropriation, was incorrect, “The cost sharing reduction payments are being made as part of a mandatory payment program that Congress has fully appropriated.” So the Department of Justice and the Treasury Department and the Department of Health and Human Services maintain that the payment they made was licit and Congressionally approved as part of Congressional appropriations.
However, prior budget requests and negotiations tell a different story about how Obamacare cost-sharing is funded.
“For fiscal year 2014, the Centers for Medicare and Medicaid Services (the division of Health and Human Services that implements the program), asked Congress for an annual appropriation of $4 billion to finance the cost-sharing payments that year and another $1.4 billion “advance appropriation” for the first quarter of fiscal year 2015, “to permit CMS to reimburse issuers …”
In making the request, CMS was in effect acknowledging that it needed congressional appropriations to make the payments. But when Congress rejected the request, the administration went ahead and made the payments anyway.
The argument that annual appropriations are required to make payments is also backed up by a report from the Congressional Research Service, which has differentiated between the tax credit subsidies that Obamacare provides to individuals to help them purchase insurance, and the cost-sharing payments to insurers.
In a July 2013 letter to then Sen. Tom Coburn, Congressional Research Service wrote that, “unlike the refundable tax credits, these [cost-sharing] payments to the health plans do not appear to be funded through a permanent appropriation. Instead, it appears from the President’s FY2014 budget that funds for these payments are intended to be made available through annual appropriations.”
As we are likely to not receive any answers soon regarding the $3 billion in Obamacare funding, or the source, here are some things to think about and look for as we wait:
1) How will cost-sharing be funded in this year’s budget?
2) Where did the $3 billion come from? If the $3 billion came from another agency, does that mean we have agencies who have large enough slush funds to absorb a $3 billion transfer?
3) If the $3 billion was tacked onto the deficit (like the student loan “bailout”), what does this bode for future cost-sharing payments? The Congressional Budget Office has already estimated that cost-sharing payments to insurers are expected to cost about $150 billion over the next 10 years.
by | ARTICLES, GOVERNMENT, OBAMA, OBAMACARE, POLITICS, TAX TIPS, TAXES
I’ve hinted that the Obama Administration and Democrats are now worrying about the backlash regarding the Obamacare penalty. This is the first year Americans who did not purchase health insurance will have to confront it on their tax bill. Byron York over at the Washington Examiner did a great job discussing the politics of the penalty as well as the new “special enrollment period” that will open up at tax-filing time.
“The Democrats who wrote and passed the Affordable Care Act were sure of two things: The law had to include a mandate requiring every American to purchase health insurance, and it had to have an enforcement mechanism to make the mandate work. Enforcement has always been at the heart of Obamacare.
Now, though, enforcement time has come, and some Democrats are shying away from the coercive measures they themselves wrote into law.
The Internal Revenue Service is the enforcement arm of Obamacare, and with tax forms due April 15, Americans who did not purchase coverage and who have not received one of the many exemptions already offered by the administration are discovering they will have to pay a substantial fine. For a household with, say, no kids and two earners making $35,000 a piece, the fine will be $500, paid at tax time.
That’s already a fact. What is particularly worrisome to Democrats now is that, as those taxpayers discover the penalty they owe, they will already be racking up a new, higher penalty for 2015. This year, the fine for not obeying Obamacare’s edict is $325 per adult, or two percent of income above the filing threshold, whichever is higher. So that couple making $35,000 a year each will have to pay $1,000.
There’s another problem. The administration’s enrollment period just ended on February 15. So if people haven’t signed up for Obamacare already, they’ll be stuck paying the higher penalty for 2015.
By the way, Democrats don’t like to call the Obamacare penalty a penalty; its official name is the Shared Responsibility Payment. But the fact is, the lawmakers’ intent in levying the fines was to make it so painful for the average American to ignore Obamacare that he or she will ultimately knuckle under and do as instructed.
Except that it’s easier to inflict theoretical pain than actual pain. Tax filing season is enlightening many Americans for the first time about the “mechanics involved” in Obamacare’s fee structure, Democratic Rep. Lloyd Doggett wrote to the Centers for Medicare and Medicaid Services on December 29. ‘Many taxpayers will see the financial consequences of their decision not to enroll in health insurance for the first time when they make the Shared Responsibility Payment.’
That is why Doggett, who has since been joined by fellow Democratic Reps. Sander Levin and Jim McDermott, asked the administration to create a new signup period for anyone who claims ignorance of the penalty. On Friday, the administration complied, creating a “special enrollment period” from March 15 to April 30.
To be eligible, according to an administration press release, people will have to “attest that they first became aware of, or understood the implications of, the Shared Responsibility Payment after the end of open enrollment … in connection with preparing their 2014 taxes.”
It’s not the most stringent standard: Just say you didn’t know. But even with that low bar, a significant number of Americans will decide not to enroll in Obamacare. For some, it’s the result of a financial calculation; paying the fine is cheaper than complying. Others are unaware. Maybe a few are just defiant.
Whatever the reasons, quite a few people will be hit with the penalty; Doggett and his Democratic colleagues subscribe to the Treasury Department’s estimate that somewhere between three million and six million Americans will have to pay the Obamacare penalty on the tax forms they’re filing now. Many will owe more next year, when the penalty goes even higher in 2016.
The individual mandate has always been extremely unpopular. In December 2014, just a couple of months ago, the Kaiser Family Foundation found that 64 percent of those surveyed don’t like the mandate. The level of disapproval has been pretty consistent since the law was passed.
And there’s very little chance the individual mandate’s approval numbers will improve, now that millions of Americans are getting a taste of what it really means. They’re learning an essential truth of Obamacare, which is that if you don’t sign up, the IRS will make you pay. No matter how much some Democrats would like to soften the blow they have delivered to the American people, that’s the truth about Obamacare.”
by | ARTICLES, ECONOMY, OBAMA, OBAMACARE, POLITICS, TAXES
As the Obamacare sign up season ended, some Democrats are concerned that there might be a kerfuffle at tax time when taxpayers who opted not to have health insurance coverage last year learn they have to pay a penalty-tax-fee. The penalty is officially called the “shared responsibility payment”.
Three Democrat officials have appealed to the Obama Administration to offer a special enrollment period at tax filing time.
This is the first year the penalty is levied. The penalty for the 2014 tax year is relatively cheap in order to transition Obamacare into American life. However, next year and in subsequent years, the penalty goes up swiftly. This is why some lawmakers are concerned, because the open enrollment period has ended, and those who still don’t have insurance will face steeper fines.
For not having health insurance last year, the fine is $95 per person or 1 percent of household income above the threshold for filing taxes, whichever is greater. But the fine increase to $325 per person or 2 percent of household income to be collected next year, for those who opted not to enroll in Obamacare or have health insurance at all.
This of course would be one of many tweaks to the law since it was passed in 2010. What Democrats are particularly worried about is the fallout of a massive tax penalty in 2016 — when the Presidential election campaigns are in full swing. The backlash is certain to be harsher next year, and even more so beyond, and the health law will be harder to defend and justify. According to government estimates, the average fine will be about $1,100.”
The White House remains uncommitted as to whether it will enact a small filing season around April 15th or consider having open enrollment next year be shifted or extended to include some or all of the tax season. Of course they’ll do whatever it takes to mask the consequences of Obamacare’s policies, again and again and again. If it was such a great piece of legislation, it should be able to stand on its own merit. But it wasn’t — and more and more people finally realize it.
by | ARTICLES, BLOG, FREEDOM, OBAMA, OBAMACARE, POLITICS, TAX TIPS, TAXES
If you are one of the millions of Americans who declined health insurance and decided to pay the fee tax fine penalty, be aware that it will be a part of your 2014 tax calculations — and beyond.
The penalty is officially called the “shared responsibility payment”. This is on U.S. Individual Income Tax Return for 2014, Form 1040, line 61; OR Form 1040A, line 38; OR Form 1040EZ, line 11. The instructions to calculate that are here, on page 5.
The penalty for 2014 is relatively cheap in order to transition Obamacare into your life. Be aware, however, that next year and in subsequent years, the penalty goes up swiftly — pressuring you to get a health insurance plan or else pay the piper.
Here’s how it works:
“Beginning in 2014, absent a qualified exemption, you will be required to obtain health insurance. If you fail to comply, you will be subject to a penalty of 1.0% of your annual income or $95.00, whichever is greater.
In 2015, the penalty increases to the greater of 2.0% of annual income or $325 per person. The following year it becomes the greater of 2.5% of income or $695 per person. After 2016, it will be indexed to the cost of living.
It should also be noted that the maximum penalty is capped at three times the per person penalty. For example, if you earn $28,500 in 2014, 1.0% of your income would equal $285. Therefore, if you earn more than this, your maximum penalty would remain the same. All penalties will be due and payable with your annual federal income tax return. Hence, the penalty for 2014 would be due by April 15, 2015 and the IRS will be the collection agency used.”
The method of assessing and collection the fee is through the Internal Revenue Service (IRS). The fee will be collected by deducting its cost from a person’s tax refund. But for those who don’t get a refund, the IRS isn’t allowed to demand payment either, so it is unclear how those fees will be attained. This ambiguity also leads to further questions about how Obamacare is being actually being paid for (as the penalty is one of the revenues to help offset the costs).”
Not sure if you qualify for an exemption to maintain qualified coverage? The IRS rules allow an exemption if you:
–Have no affordable coverage options because the minimum amount you must pay for the annual premiums is more than eight percent of your household income, OR
–Have a gap in coverage for less than three consecutive months, OR
–Qualify for an exemption for one of several other reasons, including having a hardship that prevents you from obtaining coverage, or belonging to a group explicitly exempt from the requirement.
Interestingly, Sylvia Burwell, the Secretary of Health and Human Services, indicated today that “that the administration might offer some enrollment flexibility around the April 15 tax deadline, so that people who suddenly realize they face a penalty for remaining uninsured could have an opportunity to remedy that.” Burwell, however, did not offer any specifics of what that flexibility might look like.
Sunday, February 15 is the Obamacare enrollment deadline. The CBO lowered its target for this year, from 13 million paid enrollees, to 9.1 paid enrollees. According to the latest figures which combine “HHS data on enrollment through HealthCare.gov and the 14 state-run exchanges, more than 10 million people had signed up as of earlier this month. That means they’d selected a plan, but many still have to make their first premium payment to get covered. Inevitably, some won’t do that.” Also note, New York announced today that citizens have an extended enrollment deadline until February 28 to enroll in Obamacare coverage on the state exchange.
Last year, 6.7 million people paid for Obamacare coverage, a number far fewer than Administration officials predicted when Obamacare began in October 2013.
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Obama’s budget for FY2016 claimed $1.8 trillion in deficit savings over a ten year period, 2016-2025. He used PAYGO (pay-as-you-go) rules to determine this figure, which basically means paring tax increases and spending reductions on one side to pay for new spending programs and tax credits on the other side, with anything left over going to the deficit.
However, his numbers for overall deficit reduction appear to be overstated, according to an analysis by the Committee For a Responsible Federal Budget (CRFB), by “using a baseline which effectively ignores the costs of extending or repealing certain policies and assuming a large increase in spending in the future to claim savings from extending spending limits after 2021.”
The Chicago Sun-Times did a decent summary of the CRFB report. Essentially, Obama makes a series of assumptions about future budget items to achieve his number for deficit reduction ($1.8 trillion), so that it comes close to the amount of tax hikes in the budget ($2 trillion), making it somewhat politically palatable — at least for his side. Here are the major points:
“MANDATORY AUTOMATIC CUTS
In the budget table summarizing the $1.8 trillion in deficit cuts, there’s a line that adds back funds to replace the automatic, across-the-board cuts to a variety of mandatory programs, including a 2 percentage point cut in payments to doctors who treat Medicare patients.
That’s a major assumption on Obama’s part about the fate of the automatic cuts, part of the deal he struck with Congress in August 2011.
Cost: $185 billion over 10 years.
MEDICARE FEES
There’s a proposal to permanently fix a flawed Medicare formula that threatens doctors with an even bigger 21 percent fee cut. Lawmakers typically “patch” the formula for a year or two but hope for a long-term solution this year.
Cost: $108 billion.
REFUNDABLE TAX CREDITS
A set of refundable tax credits — tax refunds that go out to low-income people who don’t owe federal income tax — expire in 2017. So does a maximum $2,500 tax credit for the cost of college. Obama’s budget simply assumes they get extended.
Cost: $166 billion.
INFLATED SPENDING BASELINE
This one’s tricky and requires background. Under budget rules, official scorekeepers at the Congressional Budget Office are supposed to set an arbitrary baseline for annual agency budgets passed by Congress each year that rises each year with inflation at a relatively generous pace.
The 2011 Budget Control Act slashed this spending increase by $900 billion by setting spending “caps” well below this baseline. Well, the caps are lifted after 2021, but Obama’s 10-year budget covers four more years. The White House assumes the baseline would jump to inflated levels that pretend the 2011 law never happened. Then it claims huge savings when cutting them back in 2022-25 to more realistic levels.
Questionable savings: about $310 billion.
DEBT SERVICE
Additional debt would have to be issued to cover the above policies, and interest costs on that debt are considerable. Cost: about $105 billion
GRAND TOTAL: $874 BILLION
In summary, Obama’s budget claims $1.809 trillion in deficit savings. Take away $874 billion accruing from accounting tricks and there’s about $935 billion left.”
There you have it. $935 billion is vastly different than $1.8 trillion — essentially saving only half of what Obama claims. For those who want to get into the nitty-gritty, you can read the full CRFB analysis here.
The government is always playing around with numbers and accounting tricks. Here are past examples of fuzzy math for Social Security gimmicks, Obamacare deficit scoring, and boosting Obamacare enrollment numbers. So this latest one is anything but surprising.
by | ARTICLES, BLOG, FREEDOM, GOVERNMENT, OBAMA, OBAMACARE, POLITICS, QUICKLY NOTED, TAX TIPS, TAXES
Since there seems to be increased interest, and confusion, regarding tax filing and Obamacare this year, it is worth it add some more information to help navigate the process.
The IRS Tax Form 1095a is officially known as the “Health Insurance Marketplace Statement”. If a household member or members enrolled in a healthcare plan through a state or federal exchange, you will receive a 1095a in the mail by early February. You cannot file your taxes without it. It contains information regarding your coverage, such as the number of people enrolled in a marketplace plan, and the dates of effective coverage.
Please note: you will not receive a Form 1095a if you have health coverage through a job or through programs such as Medicaid, Medicare, or the Children’s Health Insurance Program (CHIP).
What you will see on a Form 1095a?
–The form will have information about every member of your household who received Obamacare coverage in 2014. Each person will be listed separately.
–The form will list month-by-month, the amount you paid for your health insurance premium. Each person will be listed separately.
–The form will provide the amount of the “premium tax credits” you received in 2014. They are also called “advanced payments”. This amount is what lowered your monthly premiums, and was calculated based upon income information you provided when you enrolled.
–The form will list the cost of a “benchmark” premium that your premium tax credit is based on. This was the second-lowest cost silver plan, and was considered the “benchmark” to determine subsidies for lower- and moderate-income earners who enrolled in Obamacare.
Why is the 1095a necessary?
The 1095a is your PROOF OF INSURANCE. It contains all the information you need to fill out your form 8965, which is the Premium Tax Credit form. The 8962 Form is a worksheet, whose calculation gets recorded on your 2014 Tax Return.
The main point of all of these forms is really the Premium Tax Credit portion. Remember, 85% of Obamacare enrollees received some sort of subsidy, which is properly known to the IRS as a “Premium Tax Credit”. But most people opted not to receive their tax credit at tax filing time (now). They received it in advance, during 2014, in the form of monthly amounts that were credited against the monthly healthcare premium costs. These advance payments lowered the monthly cost of insurance.
The credit was tabulated based on estimated income information furnished during the application process. But because income situations can change over the course of a year (remember you enrolled at the beginning of 2014), the IRS requires you to re-calculate your income again at tax time (now), and match it against the amount and information you provided when you enrolled.
Since your Premium Tax Credit was based upon estimated income amounts, the amount you were eligible to receive as a tax credit may be higher or lower than what you actually did receive. So, using the information you receive on your 1095a about your household and your payments and your subsidies, you then fill out the Form 8962 to calculate the ACTUAL amount of tax credit you were eligible for in 2014, and check it against what you received as an advance payment applied to your monthly premium costs. Any differences will be resolved either by either reducing or increasing your tax credit amount, which will then affect the final amount of taxes due or taxes returned to you.
Also note — if you enrolled in Obamacare, you must fill out Form 8925, which means you cannot file a 1040EZ. You must file a traditional 1040 tax return.
All the information listed above that you will see on the 1095a is important. If there are any errors, it is imperative that you contact the Obamacare marketplace immediately to resolve the inconsistencies before you file your taxes.
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Ben Casselman penned a piece a year ago in the Wall Street Journal, which documented the decline of risk-taking in business ventures. Hard data showed that both the number of new companies and the use of venture capital is waning. He rightfully suggested that this downward trend is a major contributor to the fact that the recovery from the recent recession is so painfully slow and anemic.
Casselman went on to explain that economists aren’t entirely sure what is behind the decline and gave some potential causes: health care costs, licensing requirements, an aging population, and an increase in large corporations are among some of the suggestions. While these factors do contribute, Casselman missed the glaring elephant in the room: the government, and her anti-business policies, do more to stifle free business activity than any other than any other single mitigating circumstance. Looking at the article a year later, the situation has continued to decline. Here’s how.
This administration has been exceedingly heavy-handed in its efforts to demonize businesses, while promising that businesses will be highly taxed and regulated. Whether it is labor regulation by the NRLB or environmental regulation by the EPA, government interference has been overreaching and restrictive.
Additionally, there have been huge increases in both criminal rules and regulations about what businesses are allowed and not allowed to do — from nitpicky labor rules, to dictating employee minutiae, to minimum wage requirements, all which restrict business hiring — and even employee firing. The EEOC has joined in with several lawsuits against private businesses, deemed by one judge as “laughable”, “based on unreliable data”, and “rife with analytical error”.
More unfortunately, Obama has provided the background for a litigation-friendly environment. If a larger, more financially stable company wants to steal something from a smaller company, they can sue them or just threaten with a costly legal battle. Or, if labor doesn’t like them, they can force them to shut them down as an alternative to litigation. What’s worse, Obama’s Labor Secretary, Thomas Perez, particularly favors the use of “disparate impact” theory with business labor disputes, because, as NRO noted, it “sets a very low bar for proving discrimination. Under it, prosecutors need not prove intent, merely that minorities have suffered a disparate impact from some action”. This man very nearly became the next Attorney General nominee.
More recently, the Obama Administration has decided to wage war on business inversions, by declaring companies who wish to move their headquarters abroad to be “unpatriotic”, and “tax dodgers”. Instead of fixing the root problem — which is that the United States is the only major nation to tax American companies on foreign profits as well as domestic — he instead suddenly tightens the rules for companies and calls the perfectly legal process of inversion to be a “loophole”. Couple that with the fact that we have the highest corporate tax rate in the world, and its no wonder that the United States recently ranked 32 out of 34 countries in the new “International Tax Competitiveness Index”.
Of course, there will be some successes. It just now takes a higher level of skill, ideas, and money to exercise your entrepreneurial spirit. It’s not like there won’t be the Jeffrey Bezos or the Bill Gates or the Steve Jobs. They’ll still come through everything despite the immense impediments. The problem is that it is the middle entrepreneurs who are having a hard time getting started, and even when they do, they will likely get discouraged in the mess. Yet it is precisely this middle group, the bread-and-butter of small businesses, that have made this country great. That future is threatened, as we are seeing now in subtle shifts within the realm of business making.
The future of this country will continue to decline if the anti-business sentiment that Obama has unleashed is allowed to continue. The middle entrepreneurs, the mom-and-pops, the family businesses are the ones that make up the difference between the very tepid growth that we are seeing and the strong growth and recovery that could be better if businesses actually had better opportunity.
Businesses go into business not to comply with government dictates, but to provide a product, a service, to make things. The very liberty for Americans to have the opportunity to succeed and fail, to take risk, to survive, and to thrive is under siege.
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This year, taxes will get extra tricky, because filers will be required to account for their health insurance on their forms. There are four ways to do so:
1) For taxpayers who do not have Obamacare, the process is simple: check a box indicating you have insurance. This is U.S. Individual Income Tax Return for 2014, line 61
2) If a person opted not to have any insurance, he or she needs to pay the fine/tax, which has been named the “shared responsibility payment”. This is on U.S. Individual Income Tax Return for 2014, Form 1040, line 61; Form 1040A, line 38; or Form 1040EZ, line 11. The instructions to calculate that are here, on page 5.
3) If you have a Marketplace-granted coverage exemption or you are claiming a coverage exemption on your return, fill out form 8965, and mark it on the U.S. Individual Income Tax Return for 2014, Form 1040, line 62.
4) For those who enrolled in an Obamacare plan through the Marketplace, they will have a more comprehensive section and required forms. Here’s the crucial information you need to know about the Form 1095 (Health Insurance Marketplace Statement) and the Form 8962 (Premium Tax Credit, or PTC).
The 1095a
First — please note, you must have the 1095a form to file your Premium Tax Credit form. If you are filing the Premium Tax Credit form, you can’t file a 1040 EZ form and will need to file a traditional 1040.
Now, the 1095a is a form that will be mailed to each household who enrolled in an Obamacare health insurance exchanges plan, whether it was for your state or it was a federal marketplace. The IRS is very clear: This is your proof of insurance.
The 1095a forms were supposed have arrived by January 31, the same date as W-2s and 1099s, but now it seems the new date is Feb. 2nd. You should also be able to download the 1095a form for your household from the exchange website.
The 8962
“Unfortunately, the Obamacare tax form you’ll get from your health-insurance provider won’t have all of the information you’ll need to report to the IRS. The Premium Tax Credit Form (8962), requires you to refer to your adjusted gross income on your tax return, as well as looking up the appropriate federal poverty line figure for your state. In addition, you’ll need to do many of the calculations to compare the information you provide from Form 1095a with other tax information from elsewhere on your return.”
Why do I need a form for a form?
When you applied for Obamacare coverage, you estimated your earnings for 2014. The exchange used that figure to calculate your Obamacare credit/subsidy. But, things change with income and households. Therefore, the 8962 is a worksheet to calculate the income amount again based on what you actually made in 2014; and if the figures do not match, your credit amount will have to be adjusted.
In order to be extraordinarily helpful to taxpayers wrestling with how to properly file their taxes and include their health insurance information, the IRS has published a 21 page primer. You can view the 21 pages of instructions here. This has links to three long forms and nine tip sheets.
Good luck, everyone!
