The controversial Affordable Care has caused debate and litigation since it was signed by the President in 2010. The Affordable Care Act embodies three reforms to overhaul the American healthcare system. First, the Act required guaranteed issue and community rating which requires health insurance providers to offer health insurance to offer health insurance policies to everyone within a given territory, without medical underwriting. Second, the Act issued a national mandate requiring individuals to maintain health insurance coverage, or pay a fine to the IRS. Lastly, the Act seeks to make healthcare more affordable through giving refundable tax credits to individuals with household incomes between 100% and 400% of the federal poverty line. The Act also requires the creation of an "Exchange" in each state which functions as a marketplace which allows individuals to shop for different insurance plans. The Act states that the federal government will establish an exchange if a state does not. The Act supplies that tax credits shall be allowed for any applicable tax payer, but only if the taxpayer has enrolled in an insurance plan through an exchange established by a state. An IRS regulation interprets that the language as making tax credits available on an exchange regardless of whether the exchange is established by a state or HHS. The ambiguities within the Act's language and the IRS's regulation caused confusion.
As tax season is well underway, employers are asked to define who is on their payroll. Employees or contractors? This is a seemingly simple distinction, but an employer may not have the same classification as the IRS or their respective state's department of treasury. This label defines the obligations of both the employer and the worker to the IRS.