The Affordable Care Act and Taxes

The Affordable Care Act and Taxes


Understanding Shared Responsibility Payment

The federal health care law known as the Affordable Care Act -- or Obamacare -- requires all Americans to have health insurance. If you currently don't have health insurance, you must get an exemption from the requirement to buy coverage, or wind up paying a tax penalty. The law says citizens, employers and government share the responsibility of keeping everyone covered, so the fee for going without insurance has been dubbed the "shared responsibility payment."

Insurance requirements

Under Obamacare, you and your dependents must be covered by a health insurance policy that provides "minimum essential coverage." Health insurance you get from an employer provides this level of coverage, as do government health insurance programs such as Medicaid and Medicare. Any policy you buy through the online marketplaces set up under Obamacare also gets you minimum essential coverage. A health insurance provider can tell you whether a policy offers minimum essential coverage.

Available exemptions

The Affordable Care Act includes several exceptions to the coverage requirement. If you have an exemption, you don't have to pay the shared responsibility fee even if you don't buy health insurance.

Take a look at the following list. If any of these apply to you, you may be exempt:

  • Your income is so low that you aren't required to file a tax return. For example, single taxpayers in 2014 don’t have to file if their income is $10,150 or less; for married couples, it’s $20,300. This amount changes each year.

  • You can't find affordable insurance. The law defines affordable as a policy that costs no more than 8 percent of your income.

  • You have a gap in coverage for less than three months

  • You're a member of an Indian tribe recognized by the federal government

  • You take part in a health care sharing ministry. This is a religious-based group whose members pledge to pay one another's medical bills.

  • You belong to a recognized religious group with faith-based objections to all forms of health insurance -- not just Obamacare

  • You are an inmate or are in the country illegally

  • You apply for and receive a hardship exemption, such as for homelessness, bankruptcy or natural disaster

Making the payment

If you're required to make a shared responsibility payment, the amount you'll pay depends on several factors:

  • How many people in your household went uninsured during the year

  • Whether the uninsured people were adults or children

  • How long they were uninsured.

  • Your household income

You start by calculating your "full" shared responsibility payment -- how much you'd owe if you were uninsured all year. You then adjust that full payment according to how long you were without insurance.

For example, if your full shared responsibility payment was $480 and you were uninsured for half the year, you would pay half of that $480, or $240. In most cases, you'll calculate and make your shared responsibility payment when you file your income tax return.

Calculating the payment

The shared responsibility payment is being implemented gradually over a number of years:

  • For 2014, the full payment is $95 for each adult, $47.50 for each child, up to a maximum of $285 -- or 1% of your household income, whichever is higher

  • For 2015, the full payment is $325 for each adult, $162.50 for each child, up to a maximum of $975 -- or 2% of your household income, whichever is higher

  • For 2016, the full payment is $695 per person, $347.50 for each child, up to a maximum of $2,085 -- or 2.5% of your household income, whichever is higher

After 2016, the household income percentage remains at 2.5%; the per-person amounts and the household maximum will rise with inflation.

PHANTOM POWER Marketing professionals are not certified accountants. We’re hoping the information provided in this article will help get these valuable deduction opportunities on your radar so you can increase your Tax Refund. Please be sure to consult with your tax adviser to see if you qualify for a particular credit or deduction.


Check back in with the PHANTOM POWER Marketing Blog for more tips on increasing your Tax Refund.

For more information about anything you’ve read in this article speak with your tax professional or visit


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