Individual Shared Responsibility Provision, aka Affordable Care Act

By Dyan Bomer on Jan 06, 2015 at 12:24 PM in VITA (Volunteer Income Tax Assistance)
Individual Shared Responsibility Provision, aka Affordable Care Act
Henry has a message for you!

Almost everyone will need to do something new when they file their tax return this year. The Individual Shared Responsibility provision, which is an important part of the Affordable Care Act, calls for taxpayers to have qualifying health care coverage, qualifies for a health coverage exemption or must make a payment.

Reporting health care coverage:

If you and your family have health care coverage it is simple, you will just check box 61 on your 1040! 

Qualifying coverage includes employer-sponsored coverage, coverage through most government-sponsored programs like Medicare, Medicaid and CHIP, and coverage purchased through the Health Insurance Marketplace.

Now, if you did not have it for the entire year, you will need to make an individual shared responsibility payment. The IRS does not call this a tax or fine.  You decide.

You may qualify for a health coverage exemption if you meet one of the following:

• You did not have access to coverage that is considered affordable because the minimum amount you must pay for the annual premiums is more than eight percent of your household income,

• You had a gap without coverage of less than three months, or

• You qualify for one of several other exemptions, including having a hardship that prevented you from obtaining coverage or you were a member of a group explicitly exempt from the health coverage requirement.

How you obtain a health coverage exemption depends upon the type of exemption.

You must apply for some exemptions through the Marketplace in the area where you live. Other exemptions are claimed only when filing an income tax return. Finally, some exemptions may be granted by the Marketplace or claimed when filing a tax return.

You must obtain your health coverage exemption through the Marketplace, you can claim the exemption on your 2014 income tax return filed in 2015. You will use Form 8965, Health Coverage Exemptions, to report a coverage exemption granted by the Marketplace or to claim a coverage exemption on your tax return.

Making an Individual Shared Responsibility payment

If anyone on your tax return does not have qualifying health care coverage for each month of the year and does not qualify for an exemption, you must make an individual shared responsibility payment when filing your federal income tax return in 2015.

In general, the annual payment amount is the greater of:

• One percent of your household income above the filing threshold for your filing status (e.g., unmarried, married filing jointly, etc.), or


• $95 per person without coverage or an exemption ($47.50 per individual under age 18), but limited to a family maximum of $285.

You will owe 1/12 of the annual payment for each month you or another person on your tax return doesn’t have either qualifying health care coverage or a coverage exemption. Your individual shared responsibility payment cannot exceed the national average premium for a bronze-level health plan available through the Marketplacwhich, for 2014, is $204 per month per person.

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