American businesses have been feeling the push and pull of Obamacare on their bottom lines for a while. Now, it’s time for individuals who chose to forego health insurance coverage to see what the individual shared responsibility provision has in store for them. If you did not have insurance coverage in 2014, you may need to send a little more money to the IRS when you go to file your 2014 federal tax return.
The individual shared responsibility provision became active in 2014 and, absent an exemption, requires individuals to pay a fee into the system if they choose not to carry health care insurance.
An exemption may be granted if:
- The minimum cost for your premiums totals over 8 percent of your household’s total income.
- You have had a gap in your health insurance coverage for less than three consecutive months.
- You have a hardship that prevented you from obtaining coverage.
- You are a member of certain religious groups (e.g. Amish) and you have Supplemental Security Income (SSI) exemption on file.
- There are several other criteria and fine print you can see here.
According to the IRS, your shared responsibility payment for 2014 will either be “the greater of one percent of the household’s income above the income filing threshold for your tax filing status, or a flat dollar amount of $95 per adult and $47.50 per child (under the age of 18) – but no more than $285 per family. The individual shared responsibility payment is also capped at the cost of the national average premium for bronze level health plans available through the health insurance marketplace that would cover everyone in your family who does not have minimum essential coverage and does not qualify for an exemption – for example, $12,240 for a family of five.” This fee will increase in future years.
As you prepare to file your 2014 federal tax return, here are a few things to keep in mind:
- You must make the IRS aware of whether your household had minimum essential coverage for each month in 2014. This can be done by checking a box identified on your tax return document.
- If your household qualified for an exemption in 2014, an additional form must be attached to your tax return, which will provide the IRS with the information needed to approve the exemption claim.
- Those required to make an individual shared responsibility payment, must make the payment when you submit your federal tax return to the IRS.
If you’re unsure whether you qualify for an exemption or need help calculating how much you will owe to the government when making your shared responsibility payment, email Rea & Associates. We can help you determine how the shared responsibility provision will affect you.
Author: Joe Popp, JD, LLM (Dublin)
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