IRS Reveals 2017 Average National Monthly Premium Needed to Calculate Individual Taxpayer Penalties for ACA
The IRS has issued the 2017 Average National Monthly Premium of bronze-level qualified health plans for both individuals and shared responsibility families of five or more. That figure is the benchmark by which taxpayers can assess whether they owe an individual shared responsibility payment to the IRS under the Affordable Care Act (ACA). It’s another sign that the IRS is continuing to prepare for enforcement of the ACA.
Under the ACA, taxpayers and their dependents who are without minimum essential coverage for one or more months in a taxable year may owe an individual shared responsibility payment when filing federal income tax returns, unless an exemption applies. The IRS individual penalty amount is capped at the cost of the national average premium for a bronze level plan available through the Marketplace. For 2017, the penalty translates to the greater of $695 per adult, $347.50 per child, with a family maximum of $2,085 or 2.5% of household income above the filing threshold.
Recent letters released by the IRS has further signaled that the IRS is going to move ahead with enforcement of both the individual mandate that individuals should obtain health insurance and the employer shared responsibility mandate that employers with 50 or more full-time or full-time equivalent employees provide offers of insurance that are both affordable and provide minimum essential coverage to at least 95% of their employees.
In responding to an individual taxpayer, Michael J. Montemurro Branch Chief Associate Chief Counsel Income Tax and Accounting, wrote: “You also asked about the Executive Order Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal (January 20, 2017). This Executive Order directed federal agencies to exercise the authority and discretion permitted to them by law to reduce potential burden imposed by the ACA. The Executive Order does not change the law; the legislative provisions of the ACA are still in force until changed by the Congress, and taxpayers remain required to follow the law, including the requirement to have minimum essential coverage for each month, qualify for a coverage exemption for the month, or make a shared responsibility payment.”
In another letter, the IRS informs a member of Congress who was writing on behalf of a business that has not complied with the ACA in offering required health insurance to employees for financial and religious reasons: “Section 4980H of the Internal Revenue Code provides that if an applicable large employer (generally, an employer with at least 50 full-time employees, including full-time equivalent employees, on business days in the preceding calendar year) fails to offer health coverage to its full-time employees, and if the other conditions in the statute are met, the employer is liable under the statute for the ESRP.”
The IRS has indicated that penalty notices may be sent around the end of 2017 to those companies that have not complied with the ACA or IRS filing deadlines for supplying 2015 tax year information required by the ACA.
To learn more about ACA compliance in 2020, click here.
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