“Individual Mandate” Requirements & Exemptions

Under the Affordable Care Act individuals are required to have “minimum essential coverage” for each month starting January 2014 going forward. Failure to have the required coverage results in a fee known as the “individual share responsibility payment.”

What is the penalty?

For 2014 this fee is 1% of your yearly income or $95 per person for the year, whichever is greater. The fee increases annually. In 2016 it will be 2.5% of income or $695 per person.

Who must have coverage?

All citizens living in the United States are subject to the requirement as are all permanent residents and all foreign nationals who are in the United States long enough during a calendar year to qualify as resident aliens for tax purposes.

The provision applies to individuals of all ages, including children. The adult or married couple who can claim a child or another individual as a dependent for federal income tax purposes is responsible for making the payment if the dependent does not have coverage or an exemption.

What counts as “minimum essential coverage?”

  • Employer-sponsored coverage, COBRA coverage and retiree coverage
  • Coverage purchased in the individual market
  • Medicare Part A coverage and Medicare Advantage plans and most Medicaid coverage
  • Children’s Health Insurance Program (CHIP) coverage
  • Veterans health coverage administered by the Veterans Administration
  • TRICARE coverage
  • Peace Corps volunteers coverage
  • Coverage under the Non-appropriated Fund Health Benefit Program
  • Refugee Medical Assistance supported by the Administration for Children and Families
  • Self-funded health coverage offered to students by universities for plan or policy years that begin on or before Dec. 31, 2014
  • State high risk pools for plan or policy years that begin on or before Dec. 31, 2014
  • Other coverage recognized by the Secretary of HHS as minimum essential coverage

Additional information on qualified coverage’s can be found at the IRS Q&A site here.


  • Individuals who are uninsured 3 months or less;
  • If available coverage would cost more than 8% of household income;
  • Individuals that do not have to file a tax return because income is too low;
  • Members of recognized tribe or eligible for services through an Indian Health Services provider;
  • Member of a recognized health care sharing ministry;
  • Member recognized religious sects with objections to insurance;
  • Incarcerated individual (either detained or jailed);
  • Individuals unlawfully present in the U.S.
  • Hardship exemptions as defined by HHS here.

How to apply for an exemption

Individuals can apply for exemption based on affordability, membership in a health care sharing ministry, membership in a federally recognized tribe or as a result of incarceration by:

  1. Claiming exemption when filing their 2014 federal tax return; or
  2. Using one of the five forms below (see instructions):

Additional information on exemptions and the shared responsibility act (individual mandate) can be located at either the IRS Q&A site or HealthCare.gov site.

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About Christopher Johnson

Christopher manages the consulting services department of J.W.Terrill providing regulatory, analytical, technical and wellness support to clients.

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