The IRS issued a reminder that the Affordable Care Act requires individuals to have qualifying health care coverage, qualify for an exemption, or make a “shared responsibility payment” when filing their federal income tax return.
The agency issued a one-page summary of the requirements, including instructions on what taxpayers must file and which forms to use.
Most Americans have the required “minimum essential coverage” for the entire year, the agency points out, and thus will simply need to check a box on their tax return. Others may qualify for an exemption for months they do not have coverage. The requirement to have coverage affects individuals, spouses (if filing a joint return), and dependents.
Taxpayers whose income is below the filing requirement threshold for their filing status are exempt for the entire year, and should not make a payment. They are not required to file a tax return solely to claim this exemption.
Payments only have to be made for the months the filer, his or her spouse (if they file a joint return), or any dependents do not have coverage or an exemption.
Amount of the payment
The annual payment amount is either a percentage of household income in excess of the return filing threshold or a flat dollar amount, whichever is greater.
The payment amount is capped at the national average premium for the bronze-level coverage under a qualified health plan. That figure is announced each year by the IRS. For 2015, the annual cap is $2,484 per individual.
The full annual payment is owed if the taxpayer did not have coverage or an exemption during all the months of the year. Those who only had coverage or an exemption for part of the year will prorate their payment for an amount less than the annual payment. The amount of the payment may be limited, depending on the individual’s circumstances.
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2015 and 2016 Annual Payment Amounts |
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| Year 2015 | Year 2016 | |
| Percentage amount | 2% of income above filing threshold* | 2.5% of income above filing threshold** |
| Flat dollar amount** | $325 per adult
$162.50 per child Family maximum: $975 |
$695 per adult$347.50 per child
Family maximum: $2,085 |
| The payment amount is capped at the cost of the national average premium for a bronze-level health plan available through the Marketplace. For 2015, the annual national average premium for a bronze-level health plan available through the Marketplace is $2,484 per year ($207 per month) for an individual, and $12,240 per year ($1,020 per month) for a family with five or more members. | ||
| * Filing threshold: The minimum amount of gross income an individual of a specific age and filing status (e.g., single, married filing jointly, head of household) must make to be required to file a tax return.**After 2016, the flat dollar amounts are based on the 2016 amounts plus an inflation adjustment. | ||
Making a payment
If a taxpayer is required to make a shared responsibility payment, the payment is made along with his/her federal income tax return.
The shared responsibility payment can be calculated using the worksheet included in the instructions for IRS Form 8965, “Health Coverage Exemptions.” The amount is then entered on the designated line on Form 1040, 1040A or 1040EZ.
Tax preparation software can help calculate the payment for those who file their returns electronically.
The payment amount can reduce the amount of a refund or increase the amount the taxpayer owes.
Taxpayers who cannot afford to make their payment at the time they file their tax return can request one of the payment options offered by the IRS. These include IRS Direct Pay, and online payment agreements.
