Individual Mandate

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Most Americans are now required to buy coverage, but most people are also exempt.

Overview

Starting in 2014, Section 5000A of the Affordable Care Act – the Individual Shared Responsibility provision – calls for each individual to either have minimum essential coverage for each month, qualify for an exemption, or make a payment when filing his or her federal income tax return.

Individuals can satisfy the minimum essential coverage requirement with:

  • A Government Program like Medicare, Medicaid, CHIP, or TriCare
  • Eligible Employer-Sponsored Coverage, including a grandfathered plan or coverage that does not provide minimum value
  • A Plan Purchased in the Individual Market, including a grandfathered plan

There are also a number of exemptions in the law, including exemptions for religious objectors, members of Indian tribes, people who are incarcerated, people who are not lawfully present, people below the tax filing threshold, and people for whom health insurance is unaffordable. Additionally, there are several hardship waivers described in the final regulations.

Those who fail to maintain minimum essential coverage and who do not qualify for an exemption will be subject to a tax penalty in 2014 of $95 per adult and $47.50 per child with a cap of $285 per family or 1% of household income, whichever is greater. The penalty increases in 2015 and 2015. People who are uninsured for only part of the year will pay a pro-rated penalty, but those who had a single gap in coverage of 3 months or less will not be subject to the penalty.

Source: IRS Final Regulations on the Individual Shared Responsibility Provision

Regulations and Guidance

Questions and Answers on the Individual Shared Responsibility Provision
Prepared by the IRS. (Last Reviewed or Updated 09/24/2013)
IRS Final Regulations on the Individual Shared Responsibility Provision
This document contains final regulations on the requirement to maintain minimum essential coverage enacted by the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010. These final regulations provide guidance to individual taxpayers on the liability under section 5000A of the Internal Revenue Code for the shared responsibility payment for not maintaining minimum essential coverage. (08/27/2013)
HHS Final Rule: Eligibility for Exemptions; Miscellaneous Minimum Essential Coverage Provisions
This final rule specifies how HHS will determine eligibility for and grant certificates of exemption from the individual shared responsibility payment described in section 5000A of the Internal Revenue Code. Additionally, this final rule implements the responsibilities of the Secretary of Health and Human Services, in coordination with the Secretary of the Treasury, to designate other health benefits coverage as minimum essential coverage by providing that certain coverage be designated as minimum essential coverage. It also outlines substantive and procedural requirements that other types of individual coverage must fulfill in order to be certified as minimum essential coverage. (07/01/2013)
IRS Notice 2013-42: Transition Relief for Employees and Related Individuals Eligible to Enroll in Eligible Employer-Sponsored Health Plans for Non-Calendar Plan Years that Begin in 2013 and End in 2014
This document provides transition relief from the shared responsibility provision for employees and their families who are eligible to enroll in certain employer-sponsored health plans with a plan year other than a calendar year if the plan year begins in 2013 and ends in 2014. (06/26/2013)

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