Advisers play new role during tax season

The role of benefit advisers has been evolving since the Affordable Care Act was signed into law. Another requirement was recently added to their job description now that most Americans must get health coverage or pay a penalty: helping clients file their taxes.

“They’re looking for professional assistance,” says Bryan Koch, a Memphis, Tenn.-based managing director at CBIZ. “This is a new area you have to stay on top of.”

The individual mandate went into effect Jan. 1, 2014, so as people file their taxes prior to the April 15 deadline, this is the first time individuals will be asked about health insurance on their tax returns.

Also see: Preparing your clients for the ACA’s first tax season

For most Americans, it’s a simple matter of checking a box — those who have minimum essential health coverage mark “yes” on their Form 1040. Those who received a subsidy to help pay for insurance need to also file a Form 1095-A. Some people who were not insured in 2014 are subject to a penalty and can use Form 8965 to find out how much they owe.

That fine is $95 per adult and $47.50 per child or 1% of a person’s household income, whichever is greater. Next year, those penalties are set to increase to $325 per adult and $162.50 per child, or 2% of income, whichever is greater. There are exemptions from the individual mandate, which are reported using Form 8965.

Slow implementation adds to confusion

The ACA, which has been the law for five years, is complex. The slow implementation process hasn’t made understanding it any easier, Koch says. “The timing of everything … has added a little confusion to the process,” he says.

“There’s a lot more to it than maybe the average person would think,” says Koch, and clients are turning to advisers to help them navigate this new reporting nuance. “They’re looking for professional assistance,” he says. “It’s impacting everybody.”

Adviser must be proactive — the first conversation about taxes shouldn’t be when a client is filing their return, Koch says. Advisers must also stay informed of any new developments with their clients, he says, and ask if they have any questions or concerns.

Clients rely on advisers to keep them compliant with the law, so advisers must stay abreast to any and all changes with the ACA, Koch says. “Things are constantly evolving,” he says. “You’ve got to keep up with it — get ahead of it really — as best you can.”