This is based on information provided by the IRS, to explain who needs to sign up for health coverage. It also explains the tax consequences for failing to do so, unless you qualify for an exemption.
The Individual Shared Responsibility Payment – An Overview
You and your family must either:
- have health insurance coverage throughout the year,
- qualify for an exemption from coverage, or
- make a payment when you file your 2017 federal income tax return in 2018.
Many people already have qualifying health insurance coverage and do not need to do anything more than maintain that coverage in 2017.
What is "qualifying coverage?"
Qualifying coverage includes:
- coverage provided by your employer,
- health insurance you purchase in the Health Insurance Marketplace,
- most government-sponsored coverage (including MaineCare and Medicare), and
- coverage you purchase directly from an insurance company.
However, qualifying coverage does not include coverage that may provide limited benefits, such as coverage only for vision care or dental care, workers’ compensation, or coverage that only covers a specific disease or condition.
Who is "exempt" from getting coverage?
You may be exempt from the requirement to maintain qualified coverage if you:
- have no affordable coverage options because the minimum amount you must pay for the annual premiums is more than eight percent of your household income,
- fall within the so-called "coverage gap" because Maine didn’t expand eligibility for Medicaid (MaineCare)
- have a gap in coverage for less than three consecutive months, or
- qualify for an exemption for one of several other reasons, including having a hardship that prevents you from obtaining coverage, or belonging to a group explicitly exempt from the requirement.
NOTE: If you went without coverage for less than three consecutive months during the year, you may qualify for the "short coverage gap exemption" and will not have to make a payment for those months. If you have more than one short coverage gap during a year, the short coverage gap exemption only applies to the first.
See entire list of exemption categories - including "hardship exemptions" here. These include: homelessness, bankruptcy, domestic violence, foreclosure, unpaid medical expenses, and, incarceration.
The IRS also posts "exemption" information - including how to report each type of exemption - here.
If I'm not exempt, what are the consequences of not being covered?
For any month in 2017 that you or any of your dependents don’t maintain coverage and don’t qualify for an exemption, you will need to make an "individual shared responsibility payment" with your 2017 tax return filed in 2018.
How much is the "shared payment"?
In general, the payment amount is either 2.5 percent of your income or a flat dollar amount, whichever is greater. You will owe 1/12th of the annual payment for each month you (or your dependents) do not have coverage and are not exempt. The annual payment amount for tax year 2017 is the greater of:
- 2.5 percent of your household income that is above the tax return threshold for your filing status 1, such as Married Filing Jointly or single, or
- Your family’s flat dollar amount, which is $695 per adult and $347.50 per child, limited to a maximum of $2,085.
The individual shared responsibility payment is capped at the cost of the national average premium for the bronze level health plan available through the Marketplace. You will make the payment when you file your 2017 federal income tax return in 2018.
For example, a single adult under age 65 with household income less than $27,800 (but more than $10,400) would pay the $695 flat rate. However, a single adult under age 65 with household income greater than $27,800 would pay an annual payment based on the 2.5 percent rate.
More Information
See here for a complete list of exemptions from the Shared Responsibility Payment.
Find out more about the individual shared responsibility provision, as well as other tax-related provisions of the health care law at www.irs.gov/aca.
For more information about your coverage options, financial assistance and the Marketplace, visit HealthCare.gov.
July 2017
PTLA #249A
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