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.
If you and your dependents had minimum essential coverage for each month of 2014, you will check a box indicating that when you file your 2014 federal income tax return. If you qualify for an exemption, you will attach a form to your tax return to claim that exemption. If you are required to make the individual shared responsibility payment, you will calculate your payment and make the payment with your return.
If you choose to make an individual shared responsibility payment instead of maintaining minimum essential coverage, this means you will not have health insurance coverage to help pay for medical expenses.
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.
Example of Payment Calculation
Eduardo 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 (0.01).
$70,000 - $20,300 = $49,700
One percent of $49,700 equals $497.00.
- Using the flat dollar amount formula: Add $95 per adult
for Eduardo and Julia to $47.50 per child – for their two children.
$95.00 + $95.00 + $47.50 + $47.50 = $285.00
Find out more about the tax-related provisions of the health care law at IRS.gov/aca.
Find out more about the health care law at HealthCare.gov. or contact our office for assistance.