Under the Affordable Care Act, the Federal government, State governments, insurers, employers, and individuals share the responsibility for health insurance coverage beginning in 2014. Many people already have qualifying health insurance coverage (called minimum essential coverage) and does not need to do anything more than maintain that coverage.
The individual shared responsibility provision requires you and each member of your family to either:
Have minimum essential coverage, or
Have an exemption from the responsibility to have minimum essential coverage, or
Make a shared responsibility payment when you file your 2014 federal income tax return in 2015.
You will report minimum essential coverage, report exemptions, or make any individual shared responsibility payment when you file your 2014 federal income tax return in 2015.
If you and your family need to acquire minimum essential coverage, you may have several options. They include:
Health insurance coverage provided by your employer,
Health insurance purchased through the Health Insurance Marketplace in the area where you live, where you may qualify for financial assistance,
Coverage provided under a government-sponsored program for which you are eligible (including Medicare, Medicaid, and health care programs for veterans),
Health insurance purchased directly from an insurance company, and
Other health insurance coverage that is recognized by the Department of Health & Human Services as minimum essential coverage.
For purposes of the individual shared responsibility payment, you are considered to have minimum essential coverage for the entire month as long as you have minimum essential coverage for at least one day during that month. Similarly, if you’re eligible for an exemption for any one day of a month, you’re treated as exempt for the entire month.
The individual shared responsibility provision became active in 2014 and, absent an exemption, requires individuals to pay a fee into the system if they choose not to carry health care insurance.
An exemption may be granted if:
The minimum cost for your premiums totals over 8 percent of your household’s total income.
You have had a gap in your health insurance coverage for less than three consecutive months.
You have a hardship that prevented you from obtaining coverage.
You are a member of certain religious groups (e.g. Amish) and you have Supplemental Security Income (SSI) exemption on file.
There are other miscellaneous items of specific exemptions that do not apply generally.
Your shared responsibility payment for 2014 will either be
The greater of one percent of the household’s 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 the age of 18) – 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.
As part of your 2014 federal tax return preparation:
You must make the IRS aware of whether your household had minimum essential coverage for each month in 2014. This can be done by checking a box identified on your tax return document.
If your household qualified for an exemption in 2014, an additional form must be attached to your tax return, which will provide the IRS with the information needed to approve the exemption claim.
Those required to make an individual shared responsibility payment, must make the payment when you submit your federal tax return to the IRS.