Tax Strategy Tension Continues to Rise between Mandates and ACA Credits after the Decision made by the King

Friday, July 31, 2015 Print Email

The availability of Code Sec. 36 B was endorsed by King V.Burwell in the recent decision of the Supreme Court. This concerns the credits refundable for premiums paid in purchased health insurance with regard to Federal Exchanges. This way, the decision helps in preserving the instant viability of Federal Exchanges. Support of the required mechanisms which make the continuous imposition of feasibility of the individual mandate is also realized. Small businesses together with their employees are also helped indirectly to cope with the rising cost of health care even if they have their own traps.


Even if the employer mandate is based on size of the workforce, the mandate of individuals has been put in place for everybody since the year 2014. Although small businesses having fewer than fifty employees is never going to be subjected to the mandate of the employer, its employees will now be subject to the mandate of the individual.

It is through a structure of incremental penalty where the individual’s mandate will be accomplished. The penalty amount is in general greater than a dollar or a certain percentage of the income of the tax payer. Even then, it should not exceed the average annual premium which the tax payer would incur for health insurance.

The amount of flat dollar and the percentage applicable which computes the individual mandate are phased in 2014 all through to 2016. Inflation is adjusted for in every year.

  • Payment.

If one is penalized, making the payment of the individual mandate will be done through the return of the tax payer but for its collection, the Internal Revenue Service may not use levies, liens or criminal prosecutions.

  • Grandfathered plans

Generally, these plans are not affected by the reform in health care. It can be a health insurance cover and alternatively, a group health plan where a person was enrolled on 23rd March 2010. The family members of the individual that was covered may generally proceed in enrolling with the grand fathered plan and new employees can also be enrolled by the grandfather plan of the employer.

Source: ReadyRatios

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