Individual Responsibility

The ACA requires that individuals who can afford to do so maintain a minimum level of health insurance coverage or else pay a tax penalty. The goal of the ACA was to expand health coverage to nearly all Americans by building on the current system of employer sponsored health care, expanding Medicaid and making private health insurance available through the marketplaces to small businesses and the uninsured. The success of the marketplaces will partially depend on people without health insurance purchasing it when it becomes available in 2014 or accepting coverage they are eligible for. Covering everyone helps bring the costs of health care down. It is also important because insurers will be required to offer coverage to everyone who applies regardless of their health status or pre-existing conditions. If people were not encouraged to purchase coverage the concern is that they would wait until they get sick and have a need for coverage and that would drive up costs.

Are children required to be covered?

Yes, parents or caretakers must secure coverage for their children.

Is everyone subject to a penalty for not securing coverage?

No, a number of people are exempt including:

  • People who earn so little they are not required to file tax returns (This is adjusted annually but in the 2009 tax year it was $9,350 for an individuals and $18,700 for a family)
  • No access to affordable coverage
  • A short coverage gap (less than three months)
  • American Indian tribes
  • Other hardship exemptions designated by the HHS Secretary

What is acceptable coverage?

  • Government sponsored health plan (Medicare, Medicaid, Children’s Health Insurance Program (CHIP) or TRICARE)
  • Employer sponsored insurance
  • Individual coverage (including the health insurance marketplaces)

What is the penalty?

The penalties are administered by the IRS and change by year. Tax penalties for no coverage are the larger of:

  • 2014: $95 per adult plus $47.50 per child under age 18 up to a maximum of $285 or 1% of income
  • 2015: $325 per adult plus $162.50 per child up to a maximum of $975 or 2% of income
  • 2016: $695 per adult plus $347.50 per child up to a maximum of $2085 or 2.5% of income

When does it take effect?

The individual responsibility provisions take effect in 2014.

What help is available for moderate income people?

There are premium subsidies for low and moderate income individuals. Premiums are the amount of money that you must pay for a health insurance plan. It is usually paid monthly, quarterly, or yearly by you or your employer. It does not include co-pays, deductibles or other out of pocket costs. For more information visit the page on premium credit subsidies.