In 2014, choosing not to have a compliant health insurance plan was (and is) a viable option for many people. The tax penalty — or to use the proper name — the “Individual Shared Responsibility Payment” for 2014 was not very high. Some people decided to take the risk and go without coverage, while some decided to get a low-cost non-compliant plan. Either way, the penalty wasn’t a huge deterrent.
The penalty is increasing significantly in 2015, so this will certainly be a factor for those considering their options. See the details below. This information was taken from the Marketplace’s Learning Network for agent certification.
There will be some other important changes coming in Georgia for both group and individual health insurance plans. I will cover those changes over the course of the next several weeks.
The amount of the individual shared responsibility payment increases between 2014 and 2015.
- 2014: The annual individual shared responsibility payment is the greater of
- 1% of the taxpayer’s household income that is above the tax return filing threshold for the taxpayer’s filing status, or
- The taxpayer’s flat dollar amount, which is $95 per adult and $47.50 per child, limited to a family maximum of $285.
- However the total payment amount is capped at the cost of the national average premium for a Bronze level health plan available through the Marketplaces in 2014.
- 2015: The annual individual responsibility payment is the greater of
- 2% of the taxpayer’s household income that is above the tax return filing threshold for the taxpayer’s filing status, or
- The taxpayer’s flat dollar amount, which is $325 per adult and $162.50 per child, limited to a family maximum of $975.
- However the total payment amount is capped at the cost of the national average premium for a Bronze level health plan available through the Marketplaces in 2015.
The calculations above represent the amount of the payment for not having health insurance coverage for the entire year. Individuals will owe 1/12th of the annual payment for each month they (or their dependents) do not have coverage and are not exempt. Individuals without coverage for less than three consecutive months during the year may qualify for the short coverage gap exemption and will not have to make a payment for those months. The short coverage gap exemption only applies to the first coverage gap during a year.
The same method of calculation is used in 2016 and later years. In 2016, the payment is the greater of 2.5% of income over the filing threshold, or $695 per person ($347.50 per child under 18). After 2016, the payment is adjusted for inflation.
For more information, please visit the Internal Revenue Service (IRS) website.
Peachtree Insurance Advisors Greg Sanders 678-236-1600
