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Real Life Examples

These examples are provided to assist you to understand how the individual shared responsibility provision and the payment works.

Example One

For 2014, an individual without coverage and no exemptions.

Information on the family is as follows:

  • Annual income: $19,000
  • Filing Status: Single
  • Under the age of 65
  • Family size is 1
  • over 18, but without coverage the entire year and no exemption applies.

This person will owe the flat dollar amount of $95 for the year.

The payment is computed monthly, the monthly penalty amount is $7.92; which is the greater of 1/12 of:

  • The Flat Dollar Amount: $95 or
  • The Excess Income Amount: $88.50

    1% of $8,850 - the income amount over the filing threshold for a single person ($19,000 - $10,150).

The sum of the monthly penalty amount for the whole year is $95. The payment is capped at the national average premium for bronze level coverage. For an individual, the national average bronze premium is $2,448 annually. The cap doesn't apply.

Example Two

For 2014, a family with short coverage gaps.

Information on the family is as follows:

  • Annual income: $65,000
  • Filing Status: Married filing jointly
  • Both spouses are under the age of 65
  • Family size is 4
  • Two family members are under 18.
  • The entire family is covered for January through July, no coverage in August and September, are covered again for October and November, but lose coverage and are not covered in December.

This family will owe $37.25.

The family is uncovered for 3 months of the year. However, the first period without coverage - August and September - is a short coverage gap, which qualifies the family for an exemption from the payment.

For December, even though the family is without coverage for a period of only one month, this does not count as a short coverage gap. If there are multiple short coverage gaps in a year, only the first is exempted from the payment.

The payment applies for one month, December. The monthly penalty amount is $37.25 which is the greater of 1/12 of:

  • The Flat Dollar Amount: $285 or
  • The flat dollar amount is the lesser of: $95 for each adult and $47.50 for each child or $285.

  • The Excess Income Amount: $447

    1% of $44,700 - the income amount over the filing threshold for a married couple filing jointly ($65,000 - $20,300).

The payment is capped at the national average premium for bronze level coverage. For a family of four, the national average bronze premium for one month is $816. The cap doesn't apply.

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.