FACTBOX-U.S. IRS still has long to-do list on healthcare laws

WASHINGTON Tue Jul 9, 2013 5:12pm EDT

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WASHINGTON (Reuters) - A central part of President Barack Obama's 2010 healthcare law - a requirement that large employers offer health insurance to employees or pay a fine to the U.S. Internal Revenue Service - is being delayed for a year until 2015.

The move, which raised questions about the future of other provisions of the law, followed widespread complaints from businesses and their lobbyists about reporting requirements for employers with 50 or more full-time workers.

With less than six months left before much of the law takes effect, the IRS still has several related tax rules to finalize. Acting IRS Commissioner Danny Werfel said last month that the agency was "on path to hit the rest of our key milestones."

Here are some details.

EMPLOYER MANDATE

The Treasury Department said on July 2 that the "employer mandate" will not take effect until 2015, postponed from 2014.

The provision says any business with 50 or more full-time employees must offer affordable healthcare coverage to employees, or pay the IRS $2,000 for each full-time employee not offered coverage. A business's first 30 employees are excluded from the fee.

Businesses face the same tax if the coverage they offer is unaffordable or does not provide "minimum essential" coverage.

The IRS issued proposed rules on this January 2 and held a hearing on April 23. It is unclear when the rules - expected to specify minimum essential coverage and other requirements - will be finished.

DOCUMENTING WORKERS

As part of the employer mandate delay, Treasury said new reporting requirements for businesses on coverage of employees and dependents will be voluntary in 2014. Businesses with 50 or more full-time employees are affected.

Proposed requirements will be published in mid-2013, Treasury said. It is unclear how specific the information will be and what additional forms, if any, employees will fill out.

INDIVIDUAL MANDATE

Starting in 2014, most Americans must have health insurance or pay a fee to the IRS. Proposed rules for this were released in January. A public hearing was held on May 29. It is unclear when the rules will be finished.

The fee will be $95 per year, or 1 percent of taxable household income, in 2014; rising in phases by 2016 to $695 per person, with a cap of 2.5 percent of household income.

PREMIUM TAX CREDIT

Also starting in 2014, a tax credit will be available to low- and middle-income individuals for health insurance premiums paid, based on a percentage of income. The credit is meant to help them pay for obtaining coverage in insurance marketplaces being set up by the states and federal government.

The IRS finished the rules for this in May 2012.

HOSPITAL INSURANCE 0.9 PERCENT TAX

Starting this year, high-income earners began paying an additional 0.9 percent payroll tax on incomes over $200,000 for individuals and $250,000 for couples. That came on top of the current payroll tax, which goes toward funding Medicare federal health insurance for the elderly and disabled.

The IRS in December issued proposed rules that explain how to calculate the tax and report a tax liability. It is unclear when the rules will be finalized.

UNEARNED INCOME 3.8 PERCENT TAX

This is a new tax on investment income, such as capital gains and dividends, of 3.8 percent, on top of the current 20 percent tax, also for higher-income groups. The IRS issued proposed rules for the tax in December 2012 and had a hearing in April. It is unclear when the rules will be finished.

(Additional reporting by Kim Dixon; Editing by Kevin Drawbaugh and Doina Chiacu)

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