The Affordable Care Act (ACA) requires most individuals to either obtain acceptable health insurance coverage for themselves and their family members or pay a penalty. This rule is often referred to as the individual mandate. The individual mandate went into effect beginning 2014.
The penalty amount for not having health coverage is the greater of two amounts:
• A flat dollar amount
• A percentage of the individual’s income
However, the penalty amount that an individual must pay is capped at the national average bronze plan premium for the individual’s family size. Thus, for each taxable year, the penalty amount is the lesser of these amounts:
• The sum of the monthly penalty amounts
• The sum of the monthly national average bronze plan premiums for the shared responsibility family
Based on the ACA’s rating factors, the monthly national average bronze plan premium for an individual who does not obtain minimum essential coverage is determined by using a population-weighted average of the premium in each county (or county equivalent) that would be charged to a 21-year-old individual who does not use tobacco.
In determining a taxpayer’s monthly national average bronze plan premium for a family, the age-21, non-tobacco user premium described above is multiplied by the number of family members who are liable for a penalty, up to a maximum of five.
On Jan. 16, 2015, the Internal Revenue Service (IRS) released Revenue Procedure 2015-15 (Rev. Proc. 2015-15), which provides the 2015 monthly national average premium for bronze-level plans. For 2015, the monthly national average premium for bronze-level qualified health plans (QHPs) is as follows:
• $207 per individual ($2,484 annually)
• $1,035 for a family with five or more members ($12,420 annually)
Rev. Proc. 2015-15 is effective for taxable years ending after Dec. 31, 2014.