Starting in 2014 all individuals must be inured and have insurance for their dependents. If the individual fails to meet the coverage requirement for themselves, a spouse or dependents for one or more months, that taxpayer must make a shared responsibility payment in the form of a penalty.
Exceptions to the penalty:
- Members of a recognized religious sect who are conscientiously opposed to accepting the benefits of any private or public insurance.
- Health care sharing ministry members
- Undocumented workers, not lawfully present in the US
- Incarcerated individuals, other than those incarcerated pending the disposition of the charges.
A penalty exception applies to the following individuals
- An individual who cannot afford coverage; if the applicable individual’s required contribution for coverage for the month exceeds 8% of the household income for the taxable year
- An individual whose household income is below his or her filing threshold
- An applicable individual during any month in which he or she is a member of an Indian tribe
- An individual who does not have minimum essential coverage for a short coverage gap (less than 3 months)
- If the Secretary of Health & Human Services determines that the individual has suffered a hardship with respect to the capability to obtain coverage
Required contribution depends on whether or not the individual can get insurance
- If the individual is eligible for insurance through an employer sponsored plan, the required contribution is the portion of the annual premium the individual would pay for self-only coverage.
- For others, the required contribution is the annual premium for the lowest cost bronze plan available in the individual market through the state exchange, reduced by any premium assistance credit.
The penalty is the lesser of the sum of the monthly penalty amounts for the year or the amount equal to the national average premium for bronze level plans providing family coverage offered through an exchange.
The penalties per individual are as follows:
- 2014 is $95
- 2015 is $325
- 2016 is $695
- After 2016 the $695 is increased for inflation
- The penalty is half for any month the individual is under 18 years of age.
Minimum Essential Coverage
Minimum essential coverage is coverage under any of the following:
- Government sponsored programs
- Eligible employer sponsored plan
- Individual market plan
- Grandfathered plan
- Other coverage approved by the Secretary of Health & Human Services
Minimum Essential coverage does not include:
- Accident and disability insurance
- Liability insurance
- Worker’s compensation insurance
- Automobile medical payment insurance
- Coverage for on-side medical clinics
- Credit only insurance (ie: mortgage insurance)
- Other similar insurance coverage under which benefits for medical care are secondary or incidental to other insurance benefits.
Refundable Health Insurance Premium Assistance Credit
Individuals who purchased qualified health care through an exchange are entitled to a refundable income tax credit equal to the premium assistance credit amount.
To be eligible for the credit the following requirements must be satisfied