Were you covered under Affordable Care Act (ACA) or Grandfathered Health Insurance during 2014? If not, you may have to make an individual shared responsibility payment (SRP) on your 2014 federal tax return.
The annual penalty for not having health insurance in 2014 is $95 or 1% of your 2014 income, whichever is greater. This amount is for each person - if you have a family, you must pay this amount for you, for your spouse, and for each child ($47.50 per child under 18), up to the maximum annual penalty shown in the chart below. The penalty amount increases in future years:
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| From Kaiser Health News |
The penalty amount each year is capped at the national average premium for a Bronze-level plan. For 2014, the annual national average premium is $2,448 per individual ($204/month per individual) or $12,240 for a family of five or more members ($1,020/month).
If you are uninsured for a portion of a year, 1/12 of the yearly penalty applies to each month that you are uninsured. If you are uninsured for less than three months of the year, you do not have to make an SRP.
How does the federal government count income for purposes of calculating the SRP?
- Start with all gross income reported on your 2014 return that is not exempt from tax
- Include any income from the sale of your main home in 2014
- Include only the taxable part of any social security benefits
- Include any gains (but not losses) from Form 8949 or Schedules C, D or F
- Then subtract the filing threshold amount (see table below for your filing status)
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For example, a single person under age 65 with 2014 taxable income of $100,000 would subtract $10,150 to arrive at an adjusted income amount of $89,850. Without any health insurance in place during 2014, that person must pay an SRP of $898.50 (this amount equals the greater of $95 or $89,850 x 1%).
Who qualifies for an exemption from the SRP?
If you did not have minimum essential coverage in 2014 required by ACA, review the following list to see if you can qualify for an exemption from the SRP:
- You’re uninsured for only 1 or 2 consecutive months of the year
- You enrolled in a health plan that started no later than May 1, 2014, but were uninsured any number of months before that in 2014
- The lowest-priced coverage available to you, through either an individual or job-based plan, would cost more than 8% of your household income
- You don’t have to file a tax return because your income is below the level that requires you to
- You’re a member of a federally recognized tribe or eligible for services through an Indian Health Services provider
- You’re a member of a recognized health care sharing ministry
- You’re a member of a recognized religious sect with religious objections to insurance, including Social Security and Medicare
- You’re incarcerated (serving a term in prison or jail), and not being held pending disposition of charges
- You’re not lawfully present in the U.S.
- You’re a U.S. citizen living abroad, or one of certain types of non-citizens
- You qualify for a hardship exemption.
To learn more about how to apply for any of the exemptions shown above, visit the official government website at the following link:
Until next time,
Andrew Herman
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