What this means for you and your family

Under the Affordable Care Act, the Federal government, State governments, insurers, employers, and individuals share the responsibility for health insurance coverage beginning in 2014. Many people already have qualifying health insurance coverage (called minimum essential coverage) and do not need to do anything more than maintain that coverage.

The individual shared responsibility provision requires you and each member of your family to either:
* Have minimum essential coverage; or
* Have an exemption from the responsibility to have minimum essential coverage; or
* Make a shared responsibility payment when you file your 2014 federal income tax return in 2015.

You’ll report minimum essential coverage, report exemptions, or make any individual shared responsibility payment when you file your 2014 federal income tax return in 2015.

Minimum Essential Coverage

If you and your family need to acquire minimum essential coverage, you have several options. They include:
* Health insurance provided by your employer;
* Health insurance purchased through the Health Insurance Marketplace;
* Coverage provided under a government-sponsored program (including Medicare, Medicaid, and health care programs for veterans);
* Health insurance purchased from an insurance company; and
* Other health insurance coverage that is recognized by the Department of Health & Human Services.

Exemptions

You may be exempt from the requirement to maintain minimum essential coverage and won’t have to make a shared responsibility payment when you file your 2014 federal income tax return as long as you meet any of the following criteria:
* 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;
* You have a gap in coverage for less than three consecutive months; or
* You qualify for one of several exemptions for hardship or belong to a group explicitly exempt from the requirement.

Shared Responsibility Payment

If you or any of your dependents aren’t exempt and don’t have minimum essential coverage, you’ll need to make a shared responsibility payment on your tax return.

The shared responsibility payment (or penalty) for 2014 is the greater of:
* 1% of your yearly household income exceeding the filing threshold ($10,150 for an individual). The maximum penalty is the national average premium for a bronze plan ($208/month).
* $95 per person for the year ($47.50 per child under 18). The maximum penalty per family using this method is $285.

The percentages and flat dollar amounts will drastically increase over the next three years. In 2015, the income percentage increases to 2% of household income and the flat dollar amount increases to $325 per adult ($162.50 per child under 18). In 2016, these figures increase to 2.5% of household income and $695 per adult ($347.50 per child under 18). After 2016, these figures increase with inflation.

It’s important to remember that choosing to make the individual shared responsibility payment instead of purchasing minimum essential coverage means you’ll also have to pay the entire cost of all your medical care. You won’t be protected from high medical bills, which could lead to bankruptcy.