individual shared-responsibility payment

What is the individual shared-responsibility payment?

  • The mandate penalty still applies in 2018. If you’re uninsured in 2018 and don’t qualify for an exemption, you’ll have to pay the penalty when you file your taxes in early 2019.
  • The penalty in 2018 is the same as it was in 2016 and 2017: The greater of $695 per uninsured adult (half that amount for a child), OR 2.5 percent of household income
  • The mandate penalty will no longer apply starting in 2019. So people who are uninsured in 2019 and beyond will not have to pay a penalty when they file tax returns for those years. But the tax returns filed in 2019 (for the 2018 tax year) will still include the penalty.
  • States can implement individual mandate penalties to replace the expiring federal penalty. Massachusetts has one that pre-dates the ACA. The District of Columbia and New Jersey are on the brink of implementing individual mandate penalties, and other states are considering them.
  • In 2018, the Trump Administration made it easier for people to qualify for a hardship exemption from the penalty. A hardship exemption is now available for people living in areas with just one insurer in the exchange (or zero, but no counties ended up in that position for 2018), or in areas where all of the available, affordable, exchange plans cover abortion and that runs counter to the person’s beliefs. A hardship exemption is also available to people who “experience personal circumstances that create a hardship in obtaining health insurance coverage under a QHP,” because, for example, the person needs to see a certain specialist who isn’t in-network with any of the available exchange plans.

Since 2014, almost all Americans have been required to have health insurance. Some people are eligible for an exemption from this requirement, but non-exempt people who go without health insurance are subject to a penalty that’s assessed by the IRS. The penalty is prorated for the number of months the tax filer was uninsured during the year (one short gap of less than three months in duration is allowed without a penalty; if you’re uninsured for three months or longer, the penalty applies for the entire time you were without coverage).

The penalty started in 2014 at $95 per uninsured adult ($47.50 per child) up to $285 per family, OR 1 percent of taxable household income, whichever was greater. By 2016, the penalty increased to $695 per adult ($347.50 per child) up to $2,085 per family, OR 2.5 percent of taxable household income, whichever is greater.

The percentage of income penalty was set to remain at 2.5 percent going forward, although it is always capped at the national average cost of a bronze plan. The flat-rate penalty was indexed annually starting 2017, but 2017 and 2018, the index adjustment was zero dollars, so the flat-rate penalty remained at the 2016 level through 2018.

And as a result of the GOP tax bill that was enacted in December 2017, the penalty will no longer apply after 2018. People who are uninsured in 2019 will not face a penalty (although penalties assessed on tax filers who are uninsured in 2018 will be collected in early 2019, when the 2018 tax returns are filed).