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