Individual Mandate

The individual mandate requires that legal residents obtain healthcare coverage beginning in 2014 or face a tax penalty.

Tax Penalties Chart.png

Exemptions

There are also several exemptions to the individual mandate. Persons who are applicable individuals will still be exempt from the penalty of the individual mandate if:

  • coverage is unaffordable (excedes 9.5% of household income;
  • they do not meet the filing threshold for purposes of income tax filing;
  • they are Native Americans;
  • they have a short lapse in coverage (less than three months since they had minimum essential coverage);
  • they have suffered a hardship;
  • they are a dependent; or
  • they reside outside of the United States.

Amount of Penalty

The ACA specifies that the “applicable dollar amount” of the tax is generally $695, to be phased in and adjusted as follows:

Individual Mandate Penalties - Data.png

As you can see from this chart, the penalty tax starts as a nominal tax in 2014, and by 2016 it is much more significant.

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