Minimum essential coverage.
Three words that, if taxpayers aren’t careful, can lead them to three other words: lots of trouble.
It’s a certainty that some taxpayers this year didn’t accurately reflect minimum essential health insurance coverage on their tax returns.
Perhaps a great many taxpayers. That’s because it’s potentially an easy, or convenient, mistake to make.
An easy in that it’s possible to make an improper notation about minimum essential coverage, particularly if you’re not certain what it is. A convenient mistake in that with the IRS’s self-identified challenges of Obamacare mandates; phony tax returns; funding shortages; and more, some people may be hope the IRS won’t catch their lack of minimum essential coverage, and thus, no penalty.
In such circumstances it’s a good idea to bear in mind that ultimately, the house – in this case, the IRS – usually wins.
For individuals and businesses not interested in trying to scam the IRS, the solution is to know what it is they need to do, and under what conditions. Here’s a basic list of what is, and what isn’t, minimum essential coverage, from healthcare.gov:
What is:
• Any Marketplace plan, or any individual insurance plan you already have
• Any job-based plan, including retiree plans and COBRA coverage
• Medicare Part A or Part C
• Most Medicaid coverage
• The Children’s Health Insurance Program (CHIP)
• Most individual health plans you bought outside the Marketplace, including “grandfathered” plans. (Not all plans sold outside the Marketplace qualify as minimum essential coverage.)
• If you’re under 26, coverage under a parent’s plan
• Self-funded health coverage offered to students by universities for plan or policy years that started on or before Dec. 31, 2014 (check with your university to see if the plan counts as minimum essential coverage)
• Health coverage for Peace Corps volunteers
• Certain types of veterans health coverage through the Department of Veterans Affairs
• Most TRICARE plans
• Department of Defense Non-appropriated Fund Health Benefits Program
• Refugee Medical Assistance
• State high-risk pools for plan or policy years that started on or before December 31, 2014 (check with your high-risk pool plan to see if it qualifies as minimum essential coverage
The IRS has an even more detailed list here. What isn’t, or may not be:
• Coverage only for vision care or dental care
• Workers' compensation
• Coverage only for a specific disease or condition
• Plans that offer only discounts on medical services
There are also minimum essential coverage exemptions: religious; certain hardships; if you’re an incarcerated prisoner; a member of a federally recognized Indian tribe, and others.
If you had any question, any doubt, about what your minimum essential coverage responsibilities were in tax year 2015, don’t let them linger into this next year.
Obamacare is a complicated and complex law, with extensive and highly detailed regulations that are challenging to follow. Knowing what you’re supposed to have – and reporting it correctly – can keep the IRS from your door.
That’s a good place for it not to be.