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Introduction

The Taxpayer Advocate Service developed the Individual Shared Responsibility Provision - Payment Estimator to help you estimate the amount you may have to pay if you did not have minimum essential coverage during the year.

The Individual Shared Responsibility Provision

Under the Affordable Care Act, the federal government, state governments, insurers, employers, and individuals are given shared responsibility to reform and improve the availability, quality, and affordability of health insurance coverage in the United States.

Specifically, this provision requires each individual to:

  • Have minimum essential health coverage every month,
  • Qualify for an exemption, or
  • Make a shared responsibility payment

What is the Estimator?

If you, your spouse, or any of your dependents don’t have minimum essential coverage and don’t have exemptions, a shared responsibility payment will be due when the return is filed. This tool can help estimate that amount.

What are the Exemptions to the Provision?

You may be exempt from the requirement to maintain minimum essential coverage and thus will not have to make a shared responsibility payment when you file your federal income tax return if you meet certain criteria.

You may be exempt if you:

  • Have no affordable coverage options because the minimum amount you must pay for the annual premiums is unaffordable,
  • 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.

You can get more information about what types of exemptions are available at at:

Information You Need to Use the Estimator

You will need to provide:

  • Your expected annual household income,
  • Your expected filing status,
  • Whether you (and your spouse, if married and filing jointly), are 65 or older for the entire year,
  • Information on your family members' coverage.

Remember

This tool can only provide an estimate of the Shared Responsibility Payment - to determine the payment, use the Shared Responsibility Payment Worksheet in the Instructions for Form 8965.

If you qualify as a dependent of another taxpayer, only the person who is able to claim you as a dependent will be liable for the payment, if any.

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Estimators for Individuals:

ISRP ACA video

KEY TERMS

The Payment

How the payment is determined

In general, the Shared Responsibility Payment is one of the following:

  • A flat dollar amount. For 2016, it is $695 per person (half that for individuals under 18) and capped at the amount for 3 adults.
  • A percentage of your income (your excess income amount). For 2016, it is 2.5% of your income over the filing threshold for your filing status.
  • The national average bronze plan premium. For 2016, it is $223 per month for each family member (up to four) and $1,115 per month for a family with five or more.

If you are subject to the Shared Responsibility Payment, the payment is the larger of the flat dollar amount or your excess income amount.

The national average bronze plan premium is an overall cap (limit) on the payment. If the flat dollar amount or your excess income amount is greater than the national average bronze plan premium for your family size, the payment will be equal to the national average bronze plan premium.

Bronze Plan Premium

A monthly amount that is 1⁄12 of the annual national average premium for qualified health plans that:

  • Have a bronze level of coverage,
  • Would provide coverage for your family members who do not have minimum essential coverage, and
  • Are offered through Exchanges for plan years during the tax year.

The national average bronze plan premium is an overall cap (limit) on the payment. If the flat dollar amount or your excess income amount is greater than the national average bronze plan premium for your family size, the payment will be equal to the national average bronze plan premium.

Excess Income Amount

A certain percentage of the amount of your household income over your filing threshold.

It is defined as the product of:

  • The excess of your household income over your filing threshold for your age (and age of your spouse if married filing jointly) and filing status.
  • The income percentage, which is:
    • 1% for 2014,
    • 2% for 2015,
    • 2.5% for 2016 and forward.

Exemptions

You may be exempt from the requirement to maintain minimum essential coverage and thus will not have to make a shared responsibility payment when you file your return if you meet certain criteria.

For information on the exemptions, see:

Family Members

Your family members include you, your spouse (if married and filing a joint return), and everyone you are able to claim as dependents.

Your Shared Responsibility Family: For the shared responsibility provision, in each month, all family members who:

  • Do not have minimum essential health coverage for the month and
  • Do not qualify for an exemption.

Filing Threshold

Tax return filing threshold is the amount of gross income an individual of your age and with your filing status (e.g., single, married filing jointly, head of household) must make to be required to file a tax return.

Flat Dollar Amount

The lesser of:

  • The sum of the applicable dollar amounts for all individuals included in your shared responsibility family; or
  • 300 percent of the applicable dollar amount for adults.

The Applicable Dollar Amount

For adults it is:

  • $95 in 2014,
  • $325 in 2015, or
  • $695 in 2016.

For family members under age 18, the applicable dollar amount is half the amount for adults.

Household Income

Household income is the adjusted gross income from your tax return plus any excludible foreign earned income and tax-exempt interest you receive during the taxable year. Household income also includes the incomes of all of your dependents who are required to file tax returns.

Minimum Essential Coverage

Minimum essential coverage means coverage under a government-sponsored program, an eligible employer-sponsored plan, a plan in the individual market, a grandfathered health plan, or other health benefits coverage.

You can get more information about what types of coverage count as minimum essential coverage at the Individual Shared Responsibility Provision FAQs.

Monthly Penalty Amount

For an individual that does not qualify for an exemption and is not covered under minimum essential coverage, 1/12 multiplied by the greater of:

  • The flat dollar amount; or
  • The excess income amount.

Additionally, the national average bronze plan premium is an overall cap (limit) on the payment. If the flat dollar amount or your excess income amount is greater than the national average bronze plan premium for your family size, the payment will be equal to the national average bronze plan premium.

Short Coverage Gap

Short coverage gap means a continuous period of less than three months in which the individual is not covered under minimum essential coverage.

If the individual does not have minimum essential coverage for a continuous period of three or more months, none of the months included in the continuous period are treated as included in a short coverage gap.

If a calendar year includes more than one short coverage gap, the exemption only applies to the earliest short coverage gap.