The Affordable Care Act’s “individual mandate” provision requires every individual to have minimum essential health coverage for each month, qualify for an exemption, or make a penalty payment when filing his or her federal income tax return. Recently, the Internal Revenue Service (IRS) issued Revenue Procedure 2016-43, which provides information needed to determine the maximum penalty that may be due for 2016.
Calculating the Payment
For tax year 2016, individuals will generally pay whichever of the following penalty amounts is higher:
- 2.5% of the individual’s yearly household income above his or her applicable filing threshold; or
- $695 per person for the year ($347.50 per child under age 18).
The maximum penalty is capped at the cost of the national average premium for a bronze-level health plan available through a Health Insurance Marketplace in 2016. According to the IRS, the monthly national average premium for qualified health plans that have a bronze level of coverage and are offered through a Health Insurance Marketplace in 2016 is:
- $223 per individual; and
- $1,115 for a family with five or more members.
Our section on the Individual Mandate (Individual Shared Responsibility) provides information on the statutory exemptions from the individual mandate requirement.