HHS and IRS Issue Proposed Rules on ACA’s Individual Shared Responsibility Payments

The Department of Health and Human Services (HHS) and the Internal Revenue Service (IRS) issued proposed rules regarding the individual mandate requiring people to maintain minimum essential health coverage unless they are exempt. The proposed regulations describe who would be exempt from the mandate, and the IRS regulations describe how it will calculate penalties for those who choose to go without minimum essential coverage.

  • HHS Proposed Rules
  • IRS Proposed Rules

Some of the individuals who would not be subject to the penalty include:

  • those with established religious objections
  • those who cannot afford coverage
  • those with short gaps in coverage

The monthly penalty amount for a month is 1/12 of the greater of:

    • the flat dollar amount or
    • the percentage of income.

    The flat dollar amount is the lesser of the following amounts:

    • the sum of the applicable dollar amounts for all nonexempt individuals without minimum essential coverage for whom the taxpayer is liable or
    • 300 percent of the applicable dollar amount.

    The applicable dollar amount is $95 for 2014, $325 for 2015, and $695 for 2016, and will be increased for calendar years beginning after 2016 by a cost-of-living adjustment.

    Anyone who had insurance for one day of a month will be counted as having coverage for the whole month.

    Minimum essential coverage is one of the following:

    • coverage under a specified government sponsored program,
    • coverage under an eligible employer-sponsored plan,
    • coverage under a health plan offered in the individual market within a State,
    • coverage under a grandfathered health plan, and
    • other health benefits coverage that the Secretary of Health and Human Services recognizes.

    For an employee eligible to purchase coverage under an eligible employer sponsored plan, the required contribution for purposes of the affordability exemption is the employee’s share of the annual premium for self-only coverage. For an individual eligible to purchase coverage under an eligible employer-sponsored plan because the individual is related to an employee, the determination of whether the individual’s coverage is affordable is made by reference to the employee’s required contribution.

    Comments to HHS are due March 18, 2013.

    Comments to IRS are due May 2, 2013.

    IRS has scheduled a public hearing on this matter for May 29, 2013. Outlines of topics to be discussed at IRS’ public hearing must be received by May 3, 2013.

We welcome your comments.

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