Patient Protection and Affordable Care Act (P.L. 111-148)

The Patient Protection and Affordable Care Act, along with the Health Care and Education Reconciliation Act of 2010 (P.L. 111-152), brought about major changes to the health care system. The provisions of the two acts together required health insurance coverage for almost all Americans. To this end, the acts provided for a host of tax credits and other assistance for individuals and small business, as well as new taxes and reporting requirements to pay for it all.

The Patient Protection and Affordable Care Act, beginning in 2014, required U.S. citizens and legal residents to maintain minimum essential health insurance coverage. Individuals who failed to maintain minimum essential coverage would be subject to a penalty phased in from 2014 to 2016. The act also created a premium assistance credit, which was refundable and payable in advance directly to the insurer, to subsidize the purchase of health insurance plans through an exchange.

Under the act, a large employer who, after 2013, failed to offer its full-time employees and their dependents the opportunity to enroll in minimum essential coverage under an employer-sponsored plan for any month was subject to a penalty if at least one of its full-time employees was certified to the employer as having enrolled in health insurance coverage purchased through a State exchange for which a premium tax credit or cost-sharing reduction was allowed or paid to the employee. The act provided a tax credit for a small employer for nonelective contributions to purchase health insurance for its employees.

Beginning in 2013, the act increased the employee portion of the hospital insurance tax by 0.9 percent on wages received in excess of the threshold amount of $250,000 for a joint return ($125,000 filing separately) and $200,000 in other cases. This additional tax was on the combined wages of the employee and the employee's spouse, in the case of a joint return. This same additional hospital insurance tax applied to the self-employment tax on self-employment income in excess of the threshold amount.

Under the Patient Protection and Affordable Care Act, the IRS was responsible for overseeing a significant part of health care reform, such as the administration of additional taxes on individuals and employers, determinations of various exemptions from those taxes, and oversight of new information reporting requirements. Many of the new requirements phased-in and delayed effective dates, giving the IRS and taxpayers a window of time to prepare.