Individual shared responsibility provision

The individual shared responsibility provision^[1] is the official name of the individual mandate imposed by the Patient Protection and Affordable Care Act in the United States. This mandate requires an individual and his or her family to have a certain minimal amount of health insurance, barring certain exemptions. Otherwise, the individual is required to pay the individual shared responsibility payment as a fine. The corresponding payment is called the individual shared responsibility payment.^[2] It is one of the many Affordable Care Act tax provisions.

Summary

Starting January 2014, an individual and his or her family must have at least minimum essential coverage.^[1] Individuals may be exempt from health insurance coverage if:

The minimum amount they must pay for annual premiums is more than eight percent of their household income,
They have a gap in coverage for less than three consecutive months,
They belong to a group that is explicitly exempt from participating in the Affordable Care Act,
They qualify for an exemption for one of several other reasons, such as a hardship that prevents them from obtaining coverage.

If an individual and his or her family don't have health insurance and don't qualify for any exemptions, they will be required to make the shared responsibility payment.^[2]

Note that if an individual lacked sufficient coverage for less than three consecutive months during the year, they are not required to make the payment.

History

The Patient Protection and Affordable Care Act signed in 2010 imposed a health insurance mandate to take effect in 2014. On June 28, 2012, the Supreme Court of the United States upheld the health insurance mandate as a valid tax, in the case of National Federation of Independent Business v. Sebelius and thus within Congress' taxing power.

Minimum essential coverage

Whether health care coverage qualifies as minimum essential coverage depends largely on the type of coverage it is.^[3] The majority of coverage people have is considered to be minimum essential coverage. However, coverage providing only limited benefits does not qualify as minimum essential coverage.^[3]

The following table is not comprehensive, but does mention some of the more common health care coverage situations, and whether or not they qualify as minimum essential coverage.^[3]
Coverage Type	Examples	Qualifies as Minimum Essential Coverage?
Employer-sponsored coverage	Group health insurance coverage for employees under a governmental plan, such as the Federal Employees Health Benefit program A self-insured group health plan for employees Retiree coverage	Yes
Individual health coverage	Health insurance purchased directly from an insurance company Health insurance purchased through the Health Insurance Marketplace Health insurance provided through a student health plan	Yes
Coverage under government-sponsored programs	Medicare Part A coverage Medicare Advantage plans Most Medicaid coverage Coverage through a Basic Health Program (BHP) standard health plan	Yes
Coverage that provides limited benefits	Coverage consisting solely of excepted benefits, such as stand-alone dental, vision, accident, or disability insurance Medicaid providing only a single service, for example, only providing family planning services Some TRICARE coverage	No

Coverage exemption

If an individual or anyone in his or her family claims an exemption from minimum essential coverage, the individual is not required to make a shared responsibility payment. If an individual's gross income is below the tax return filing threshold for a certain year, that individual is automatically exempt from the shared responsibility provision for that year.^[4]

Most exemptions are claimed using Form 8965, Health Coverage Exemptions^[5], when filing a tax return. However, certain exemptions must be granted by the Health Insurance Marketplace in advance. This includes coverage exemptions for certain hardship situations and for members of certain religious sects.^[4]

The following table shows some types of exemptions available. It also indicates whether the exemption is granted by the marketplace, claimed on a tax return, or both.^[4]
Exemptions	Granted by Marketplace, Claimed on Tax Return, or either
Coverage is considered unaffordable	Tax Return
Income below the return filing threshold	Tax Return
Citizens living abroad	Tax Return
Nonresidents	Tax Return
Member of Indian Tribe	Either
Member of certain religious sects	Marketplace
General hardship	Marketplace
Resident of a state that did not expand Medicaid	Either

Shared responsibility payment

If an individual does not have minimum essential coverage and does not qualify for any exemptions, then they are required to make the shared responsibility payment. One can use the worksheets located in the instructions^[6] to Form 8965, Health Coverage Exemptions, to figure the shared responsibility payment amount due. The annual payment amount is either a percentage of the household income in excess of the return filing threshold or a flat dollar amount, whichever is greater.^[7]

References

1 2 "Individual Shared Responsibility Provision". www.irs.gov. Retrieved 2016-02-14.
1 2 "The Individual Shared Responsibility Payment - An Overview". www.irs.gov. Retrieved 2016-02-14.
1 2 3 "Individual Shared Responsibility Provision - Minimum Essential Coverage". www.irs.gov. Retrieved 2016-02-14.
1 2 3 "Individual Shared Responsibility Provision – Exemptions: Claiming or Reporting". www.irs.gov. Retrieved 2016-02-14.
↑ "Form 8965 Health Coverage Exemptions" (PDF). Internal Revenue Service. Retrieved 2016-02-15.
↑ "Instructions for Form 8965" (PDF). Internal Revenue Service. Retrieved 2016-02-15.
↑ "Individual Shared Responsibility Provision – Reporting and Calculating the Payment". www.irs.gov. Retrieved 2016-02-14.

This article is issued from Wikipedia - version of the Monday, February 15, 2016. The text is available under the Creative Commons Attribution/Share Alike but additional terms may apply for the media files.