Here’s the 4-1-1 on Calculating an Individual Shared Responsibility Payment

IRS Health Care Tax Tip 2016-40, April 5, 2016

The Affordable Care Act requires you and each member of your family to have minimum essential coverage, qualify for an insurance coverage exemption, or make an individual shared responsibility payment for months without coverage or an exemption when you file your federal income tax return.

In general, the annual payment amount is the greater of these two amounts:

• A percentage of your household income – 2 percent of income above filing threshold for  2015
• A flat dollar amount - $325 per adult and $162.50 per child for a family maximum of $975 for 2015

However, this is capped at the national average premium for a bronze level health plan available through the Marketplace. You will owe 1/12th of the annual payment for each month you or your dependents don’t have either coverage or an exemption.

Your payment amount is capped at the cost of the national average premium for a bronze level health plan available through the Marketplace. For 2015, the annual national average premium for a bronze level health plan available through the Marketplace is $2,484 per year – or $207 per month – for an individual and $12,240 per year – or $1,020 per month – for a family with five or more members.

If you are required to make a payment, you can use the worksheets located in the instructions to Form 8965, Health Coverage Exemptions PDF, to figure the shared responsibility payment amount due.

If you did not have coverage and your income was below the tax filing threshold for your filing status, you qualify for a coverage exemption.  You do not have to file a tax return solely to claim this exemption. However, if you do file a return, you should file Form 8965, Health Coverage Exemptions, and you should not make a payment with your return.

For more information about determining the amount and reporting your payment on your tax return, see our Calculating the Payment page. You can also use the Individual Shared Responsibility Payment Estimator, which can help you estimate the amount you may have to pay if you did not have minimum essential coverage during the year.

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