The Affordable Care Act includes a provision known as the “Individual Mandate”. In short, the new health law requires that all US citizens have qualified, in-force health insurance coverage. Failure to comply with this law will result in a tax penalty for individuals (less those who are exempt).

The following details how the taxation of individuals will work under the ACA:

-Penalties will be based on taxable income
-Penalties will range from 1% to 2.5% of your income, or a pre-determined amount…whichever is greater
-The total penalty for the taxable year cannot exceed the national average of the annual premiums of a bronze-level health insurance plan offered through the health insurance SHOP exchanges
-Health insurance carriers will provide proof of coverage for their subscribers, to be used with individual tax filing submissions

The Taxation Schedule

2014: 1% of your income, or $95
2015: 2% of your income, or $325
2016: 2.5% of your income, or $695
2017: 2.5% of your income, or based on the inflation rate


Certain individuals will be exempt from the individual mandate. As of this writing, they are as follows:

-Those that would have to pay more than 8% of their income for health insurance
-Those with incomes below the threshold required for filing taxes (in 2012, $9,750 for a single person and $27,100 for a married couple with two children)
-Those who qualify for religious exemptions
-Illegal aliens
-Those who are incarcerated
-Members of Native American tribes
-Those who have health insurance through their employer
-Those on Medicare or Medicaid
-Those who live below the 133% Federal Poverty Level threshold

*Disclaimer* This content is provided solely for informational purposes. It is not intended as, and does not constitute, legal or compliance advice. The information herein should not be relied upon or used as a substitute for consultation with legal, accounting, tax, and/or other professional advisors.