The Individual Shared Responsibility
Payment
Beginning in 2014, the individual shared responsibility provision
of the Affordable Care Act requires each individual to:
- maintain a minimum level of health care coverage - known as minimum
essential coverage, or
- qualify for an exemption, or
- make an individual shared responsibility payment when filing their
federal income tax returns.
Minimum essential coverage generally includes government-sponsored
programs, employer-provided health coverage, and coverage purchased
in the individual market, including the Health Insurance Marketplace.
Most people already have health insurance coverage that qualifies
as minimum essential coverage, and therefore will not need to make
a payment if they maintain their qualified coverage. However, for
each month that you, or a member of your family, is without minimum
essential coverage and do not qualify for an exemption, you will liable
for an individual shared responsibility payment.
If you and
your dependents had minimum essential coverage for each month of 2014,
you will indicate that by checking a box on your 2014 federal income
tax return. If you qualify for an exemption, you are required to attach
IRS Form 8965, Health Coverage Exemptions to your tax return
to claim the exemption. If you did not have minimum essential coverage
for each month of 2014 and are required to make the individual shared
responsibility payment, the payment is calculated and made with your
tax return.
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Warning If you choose
to make an individual shared responsibility payment instead of maintaining
minimum essential coverage, you will not have health insurance coverage
to help pay for medical expenses. |
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In general, the individual shared responsibility payment
for 2014 is the greater of:
- one percent of your household income above the income filing threshold
for your tax filing status, or
- a flat dollar amount of $95 per adult and $47.50 per child (under
age 18) in your family, but no more than $285 per family.
The individual shared responsibility payment is also
capped at the cost of the national average premium for bronze level
health plans available through the Marketplace that would cover everyone
in your family who does not have minimum essential coverage and does
not qualify for an exemption - for example, $12,240 for a family of
five. However this maximum fee will only impact the small number of
high-income taxpayers who choose to go without health insurance.
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Example Edward and Julia are married and have
two children under age 18. No family member has minimum essential
coverage for any month during 2014, and no family member qualifies
for an exemption. For 2014, their household income is $70,000 and
their tax return filing threshold amount is $20,300.
- Using the household income formula: Subtract the tax return filing
threshold amount for 2014 from the 2014 household income, then multiply
the answer by one percent ($70,000 - $20,300 = $49,700). One percent
of $49,700 equals $497.
- Using the flat dollar amount formula: Add $95 per adult for Edward
and Julia to $47.50 per child - for their two children ($95.00 + $95.00
+ $47.50 + $47.50 = $285).
Edward and Julia's shared responsibility payment for
the year for 2014 is $497. This is because the household income formula
amount of $497 is greater than flat dollar formula amount of $285,
and it is less than the $9,792 annual national average premium for
bronze level coverage for a family of four in 2014. |
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The individual shared responsibility payment amount is
based on each individual's personal circumstances, and you should
consult a tax advisor regarding the calculation of the payment.
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