Individual Shared Responsibility Provision – Reporting and Calculating the Payment
The individual shared responsibility provision of the Affordable Care Act requires you and each member of your family to have qualifying health care coverage (called minimum essential coverage), qualify for a coverage exemption, or make an individual shared responsibility payment when you file your federal income tax return. Publication 5209 - Preparing your 2014 Tax Return- the shared responsibility payment, provides information for individuals who must make a shared responsibility payment about how to figure the payment and report it on their tax return. It is important to remember that choosing to make the individual shared responsibility payment instead of enrolling in minimum essential coverage means you will also have to pay the entire cost of all your medical care. You won't be protected from the kind of very high medical bills that can sometimes lead to bankruptcy. Find out if you qualify for an exemption or must make a payment by using our interactive tool, Am I required to make an Individual Shared Responsibility Payment.
Making the Payment with Your Return
If you have to make a payment, you can use the worksheets located in the instructions to Form 8965, Health Coverage Exemptions, to figure the shared responsibility payment amount due. The amount due is reported on line 61 of the 2014 Form 1040 in the Other Taxes section, and on the corresponding lines on Form 1040A and 1040EZ. You only make a payment for the months you or your dependents did not have coverage or qualify for a coverage exemption. If you also need to report an exemption for any month during the year, see our Claiming and Reporting an Exemption page for more information about how to report or claim an exemption on your tax return.
If you did not have coverage and your income was below the tax filing threshold for your filing status (Single, Married Filing Jointly, etc.), you qualify for a coverage exemption. You do not need to file a return solely to claim this exemption. If you choose to file a tax return, you should not make a payment with your return but should complete Part II of Form 8965, Coverage Exemptions for Your Household Claimed on Your Return, to claim the coverage exemption.
Calculating the Payment
For 2014, the annual payment amount is:
- The greater of:
- 1 percent of your household income that is above the tax return filing threshold for your filing status, or
- Your family’s flat dollar amount, which is $95 per adult and $47.50 per child, limited to a family maximum of $285,
- Your payment amount is capped at the cost of the national average premium for a bronze level health plan available through the Marketplace in 2014. For 2014, the annual national average premium for a bronze level health plan available through the Marketplace is $2,448 per individual ($204 per month per individual), but $12,240 for a family with five or more members ($1,020 per month for a family with five or more members).
Calculating your payment requires you to know your household income and your tax return filing threshold.
- 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 adjusted gross incomes of all of your dependents who are required to file tax returns.
- Tax return filing threshold is the minimum 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.
2014 Federal Tax Filing Requirement Thresholds
|Filing Status||Age||Must File a Return If Gross Income Exceeds|
|65 or older||$11,700|
|Head of Household||Under 65||$13,050|
|65 or older||$14,600|
|Married Filing Jointly||Under 65 (both spouses)||$20,300|
|65 or older (one spouse)||$21,500|
|65 or older (both spouses)||$22,700|
|Married Filing Separately||Any age||$3,950|
|Qualifying Widow(er) with Dependent Children||Under 65||$16,350|
|65 or older||$17,550|
The examples below are used only to represent the mechanics of calculating the payment and are not estimates of current or future health insurance premium costs. For information on the cost of bronze level plans, visit HealthCare.gov.
Example 1: Single individual with $40,000 income
Jim, an unmarried individual with no dependents, does not have minimum essential coverage for any month during 2014 and does not qualify for an exemption. For 2014, Jim’s household income is $40,000 and his filing threshold is $10,150.
- To determine his payment using the income formula, subtract $10,150 (filing threshold) from $40,000 (2014 household income). The result is $29,850. One percent of $29,850 equals $298.50.
- Jim’s flat dollar amount is $95.
Jim’s annual national average premium for bronze level coverage for 2014 is $2,448. Because $298.50 is greater than $95 and is less than $2,448, Jim’s shared responsibility payment for 2014 is $298.50, or $24.87 for each month he is uninsured (1/12 of $298.50 equals $24.87).
Jim will make his shared responsibility payment for the months he was uninsured when he files his 2014 income tax return, which is due in April 2015.
Example 2: Married couple with 2 children, $70,000 income
Eduardo and Julia are married and have two children under 18. They do not have minimum essential coverage for any family member for any month during 2014 and no one in the family qualifies for an exemption. For 2014, their household income is $70,000 and their filing threshold is $20,300.
- To determine their payment using the income formula, subtract $20,300 (filing threshold) from $70,000 (2014 household income). The result is $49,700. One percent of $49,700 equals $497.
- Eduardo and Julia’s flat dollar amount is $285, or $95 per adult and $47.50 per child. The total of $285 is the flat dollar amount in 2014.
The family’s annual national average premium for bronze level coverage for 2014 is $9,792 ($2,448 x 4). Because $497 is greater than $285 and is less than $9,792, Eduardo and Julia’s shared responsibility payment is $497 for 2014, or $41.41 per month for each month the family is uninsured (1/12 of $497 equals $41.41).
Eduardo and Julia will make their shared responsibility payment for the months they and their children were uninsured when they file their 2014 income tax return, which is due in April 2015.