INDIVIDUAL MANDATE PENALTY
Learn more about the individual shared responsibility payment.
Note: On Dec. 20, 2017, Congress passed the Tax Cuts and Jobs Act, which included permanent effective repeal of the individual mandate by zeroing out the penalty beginning in 2019. Most individuals are still required to maintain coverage in 2018 or pay a penalty when they file their 2018 federal income tax return in 2019. Please see our news alert for more details.
Under the Affordable Care Act (ACA), most Americans are required to obtain and maintain health coverage or face financial penalties. This requirement is known as the individual mandate.
To comply with this mandate, individuals need to have “minimal essential coverage,” which may be obtained through an employer-sponsored plan, an individual insurance policy (purchased on or off the public Marketplace), a government-sponsored plan such as Medicare or Medicaid, or a U.S.-issued expatriate plan.
If someone chooses not to buy insurance, he or she may be responsible for a fee called the “individual shared responsibility payment.” This penalty is payable when filing a federal tax return and is based on the number of months during the calendar year that the individual did not have minimum essential coverage.
The annual penalty is calculated two different ways – as a fixed amount for each person without coverage (which is adjusted annually for inflation) or as a percent of annual household income. Individuals subject to this penalty pay the larger of the two amounts.
|Fee for not having health insurance||2017 Penalty||2018 Penalty||2019|
|The greater of:||
In some cases, an individual may qualify for an exemption from the individual mandate. Exemptions include:
- A gap in coverage that is less than three consecutive months
- The lowest-cost, self-only plan available is considered “unaffordable”
- A qualifying hardship or meeting other certain conditions (e.g., income below 100 percent of federal poverty level, religious reasons, or not living in the United States)
How and when to request an exemption
Most exemptions can be claimed using Internal Revenue Service (IRS) Form 8965, Health Coverage iExemptions, when filing a tax return. However, certain exemptions must be granted in advance from the public Marketplace.
For more information on available exemptions, applicable forms, and whether they need to be granted by a public marketplace in advance, please visit healthcare.gov or the IRS Individual Shared Responsibility Provision Exemptions page.