Under the Affordable Care Act’s Individual Mandate, most Americans are required to have health insurance, or pay a tax penalty if they don't. This Obamacare rule is called the “Individual Mandate” or “Individual Shared Responsibility Fee” and started in 2014.
Coverage can include job-based health insurance, individual health insurance, or insurance through a government program such as Medicaid or Medicare.
Yes. The penalty for not having “minimum essential coverage” is either a flat fee or a percentage of household income, whichever is greater.
If you don’t have coverage in 2015, you’ll have to pay the higher of these two amounts:
2% of your yearly household income. (Only the amount of income above the tax filing threshold is used to calculate the penalty. For 2015, the federal tax filing threshold is $10,150 for a person who files as a single, $20,300 for somebody who files jointly.) The maximum penalty is the national average premium for a bronze plan.
$325 per person for the year ($162.50 per child under 18). The maximum penalty per family using this method is $975.
As the chart shows below, the penalty increases each year.
Nancy is single and earns an annual income of $40,000/year. Nancy went uninsured in 2015. At tax time, Nancy is required to pay an Individual Shared Responsibility Fee.
Nancy will pay either 2% of income (minus the federal tax filing threshold) or $325, whichever is greater.
Nancy’s annual income ($40,000) minus the federal tax filing threshold ($10,150) is $29,850. Two percent (2%) of $29,850 is $597.
Since this amount is greater than $325, Nancy will pay a $597 tax penalty.
You may not have to pay the Individual Mandate tax penalty if you are uninsured, and:
Are required to pay more than 8% of your household income for the lowest cost bronze plan.
Are not a U.S. citizen, a U.S. national, or a resident alien lawfully present in the U.S.
Had one gap in coverage for less than three consecutive months during the year.
Won’t file a tax return because your income is below the tax filing threshold. In 2013, the tax filing threshold was $10,000 for individuals and $20,000 for a couple.
Are unable to qualify for Medicaid because your state has chosen not to expand the program.
Participate in a health care sharing ministry or are a member of a recognized religious sect with objections to health insurance.
Are a member of a federally recognized Indian tribe.
Qualify for a hardship exemption