< Previous Page
Though it plays a crucial role in carrying out the health care law, the IRS is part of the back-office operation. IRS agents won’t be setting up health insurance markets, and they won’t have a say in which health plans people get to pick or what doctors they see.
However, agency officials will determine who is eligible for financial assistance under the law — and who must pay penalties.
The reason the IRS is involved in what’s essentially a social program is that lawmakers crafted the financial subsidies available under the health law as tax credits. The agency already administers another major social program, the earned income tax credit, which long ago surpassed welfare as the main source of government assistance for low-income families.
The IRS handles four major components of the health care law. The most important one is determining if individual Americans are entitled to new tax credits to help pay private insurance premiums. It’s a complex calculation.
Keyed to income on a sliding scale, the credits are available starting in 2014 to households making up to four times the federal poverty level, or about $94,000 for a family of four. Individuals or families are eligible if they don’t have affordable coverage on the job. But if you understate your income to get a bigger credit, you’ll owe more taxes next year.
The agency is also in charge of assessing penalties on people who ignore the law’s requirement to carry health insurance, which applies to virtually all Americans starting next year.
On the employer side, the IRS administers a tax credit to help small businesses with low-wage employees afford coverage, and it’s also in charge of imposing penalties on companies with 50 or more employees that don’t offer coverage.
Copyright 2014 The Salt Lake Tribune. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.