1. What is the individual mandate?
• Starting January 2014, individuals must maintain minimum essential coverage or otherwise pay a penalty
Are there any exceptions to the mandate?
• Religious conscience exemption (certain faiths)
• Incarcerated individuals
• Undocumented aliens
• Those who can’t afford coverage (required contribution of more than 8% of income)
• Individuals with coverage gap of less than 3 months
• Hardship situations as defined by the Department of Health and Human Services
• Income below the tax filing threshold
• Members of Indian Tribes
What is “minimum essential coverage”?
• Medicare, Medicaid, CHIP, TRICARE, VA, Healthcare for Peace Corp volunteers
• Employer sponsored plans, including grandfathered plans, governmental plans, and small and large group
market plans
• Individual market plans, including grandfathered plans
• Other coverage designated as minimum essential coverage by the Department of Health and Human
Services or the Department of Treasury
What are the penalties?
• Greater of flat dollar amount OR percentage of individual’s taxable income over the income filing
threshold
• Flat dollar penalties (per individual):
• $95 in 2014, $325 in 2015, $695 in 2016
• For dependents under the age of 18: half of regular individual penalty
• Cap amount of 300% of flat dollar amount
• Percentage dollar penalties (per houshold):
• Percentage of taxable income over the tax filing threshold
• 1% for 2014, 2% for 2015, 2.5% for 2016
• Individual would pay the higher of the percentage penalty or the flat dollar penalty
• Generally, penalty amount is capped at amount equal to bronze level average national premium through
the state exchanges (amount unknown at this time)
How is the penalty enforced?
• Penalty is assessed as an income tax liability
• There are no criminal penalties, fines, or other liens for those who do not pay
• May be charged interest and late fees like other taxes
Last updated: 1/29/2013