The Individual Shared Responsibility Provision and Payment (a.k.a. have health insurance or pay a fine)
With the Affordable Care Act (ACA), all individuals—including children—are required to have minimal essential monthly health insurance coverage for him/herself as well as all dependents for whom he/she is financially responsible. Here are some Q’s and A’s to help you understand.
What is minimum essential coverage?
Click here to see the official IRS list of what qualifies (and what doesn’t) as minimum essential health insurance coverage, including employer sponsored insurance coverage, retiree coverage, medicare, and others.
Is anyone exempt from having to have minimum essential coverage?
Yes. There are limited cases in which an individual may receive an exemption from having required health insurance coverage, including objections due to religious conscience, hardship, or if coverage is determined to be unaffordable. Click here to see the official IRS list of which conditions meet the exemption criteria, the qualifications of each, and how this exemption is obtained (the exemption needs to be official—do not assume that you qualify!).
What if I do not have minimum essential coverage and I am not exempt?
If you do not have minimum required insurance coverage and do not meet any of the exemption criteria, you will be required to pay a new fine on your 2014 tax return.
How much is the new fine (a.k.a the individual shared responsibility payment)?
The amount of your fine will depend on a few factors. This part may be best to leave to accountants, but, if you don’t mind a little math, think of it in terms of a range that will fall between a set minimum and maximum amount.
The minimum amount–or least you could pay–for 2014 are: $95 per adult and $47.50 per child, $285 maximum per family
The maximum amount–or most you could pay–for 2014 are: $2,448 per person, $12,240 maximum per family
The amount you would likely pay would exist somewhere between those two, determined using the following equation (we warned about the math!):
I= Annual 2014 Household Income
T=Threshold ($10,150 for single tax filers and $20,300 for married filing joint tax filers)
M= Months you did not have coverage
If it seems a little daunting to manage this aspect of your tax return, lean on Sweeten CPA to take care of it. We’ve got your back! And stay tuned for Part II of this article!