Treasury Dept. Releases Final ACA Individual Mandate Penalty Rule

On Tuesday, the Treasury Department released a final rule governing how U.S. residents who fail to comply with the Affordable Care Act's individual mandate will be penalized once the provision takes effect in 2014, The Hill's "RegWatch" reports (Hattem, "RegWatch," The Hill, 8/27).

In a fact sheet released in January, HHS said the penalties would apply "only to the limited group of taxpayers who choose to spend a substantial period of time without coverage despite having ready access to affordable coverage." HHS noted that based on Congressional Budget Office estimates, the penalty would be imposed on fewer than 2% of U.S. residents (California Healthline, 1/31).

Under the final rule, individuals will be required to report on their fiscal year 2015 tax returns whether they had health insurance in 2014. Nonexempt individuals who failed to purchase insurance will be required to pay a fine of $95 or 1% of the household income, whichever is greater. The annual penalty will increase to $695 per person beginning 2016 -- or 2.5% of taxable annual income -- with the total amount increasing with inflation, the Wall Street Journal's "Washington Wire" reports.

The final rule also outlined exemptions for:

  • Individuals with incomes below the threshold required to file a tax return, or about $10,000 for an individual in 2013;
  • Individuals who already qualify for certain religious exemptions;
  • Members of American Indian tribes; and
  • Individuals who lacked insurance for fewer than three months of a given year.

Residents who have coverage through an employer or Medicare will not be subject to the penalties (Corbett Dooren, "Washington Wire," Wall Street Journal, 8/27).

Rule Also Finalizes Premium Subsidies Eligibility for Retirees, Some Individuals

The rule released Tuesday also affirmed that low- and middle-income retirees under age 65 who are eligible but not enrolled in employer-sponsored coverage can obtain federal premium subsidies next year to purchase coverage through the ACA's insurance exchanges, Crain's Business Insurance/Modern Healthcare reports.

In addition, the rule states that individuals who are eligible but not enrolled in COBRA continuation coverage will similarly be eligible for federal subsidies (Geisel, Crain's Business Insurance/Modern Healthcare, 8/27).


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