Health insurance disclosure is required on tax returns to avoid I.R.S. rejection

health insurance disclosure tax penalty

The Internal Revenue Service announced its intentions to step up the enforcement of the ACA tax penalty.

Even as President Trump works to dismantle the Affordable Care Act, the I.R.S. has taken steps to enforce health insurance disclosure on tax filings. The Internal Revenue Service revealed new regulations that will automatically reject digital filings in which insured status is not revealed.

This latest announcement reveals an intention to strengthen components of former President Obama’s health care law.

The Affordable Care Act already requires health insurance disclosure when taxes are filed. This portion of the law is designed to incentivize purchasing health plans among Americans who are not already covered through their employers. The alternative is to accept a tax penalty. However, in order to know whether or not an individual has insurance coverage, it must be disclosed on the income taxes he or she files.

To improve the effectiveness of this system and its accuracy, the I.R.S. is now enforcing the mandatory disclosure of health insurance coverage status. Any electronically filed tax return that does not include this information will be rejected.

Tax returns must include health insurance disclosure as well as whether or not the individual is exempt from the regulation.

health insurance disclosure tax penaltyThat said, individuals who submit a paper copy of their tax return won’t be off the hook. The agency explained that without health plan disclosure on paper filings it may suspend the processing of the return and could create a refund delay if one is owed to the individual.

This new I.R.S. tax professional guidance appears to be in direct opposition to President Trump’s latest efforts to cut into the Affordable Care Act. In fact, Trump’s very first executive order, which he signed on his Inauguration Day, provided a number of agencies with instructions to reduce the ACA’s regulatory reach. That said, the new guidance seems to be strengthening the enforcement of Obamacare.

The new health insurance disclosure regulation also seems to move in the opposite direction to Trump’s more recent efforts to hack into the ACA. Among other things, he recently signed executive orders to eliminate the subsidies meant to improve the affordability of health plans for lower income Americans.

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.