Example 2: Married couple with 2 children, $70,000 income
Eduardo and Julia are married and have two children under 18. They do not have minimum essential coverage for any family member for any month during 2014 and no one in the family qualifies for an exemption. For 2014, their household income is $70,000 and their filing threshold is $20,300.
- To determine their payment using the income formula, subtract $20,300 (filing threshold) from $70,000 (2014 household income). The result is $49,700. One percent of $49,700 equals $497.
- Eduardo and Julia’s flat dollar amount is $285, or $95 per adult and $47.50 per child. The total of $285 is the flat dollar amount in 2014.
The family’s annual national average premium for bronze level coverage for 2014 is $9,792 ($2,448 x 4). Because $497 is greater than $285 and is less than $9,792, Eduardo and Julia’s shared responsibility payment is $497 for 2014, or $41.41 per month for each month the family is uninsured (1/12 of $497 equals $41.41).
Eduardo and Julia will make their shared responsibility payment for the months they and their children were uninsured when they file their 2014 income tax return, which is due in April 2015.
For 2015: For each month during which a nonexempt taxpayer fails to maintain minimum essential coverage in 2015, the applicable penalty is equal to one-twelfth of the greater of:
* $325 for each household member age 18 or older and $162.50 per child (up to three
household members) or
* 2 percent of household income for the taxable year in excess of the threshold amount for
filing a tax return.
Health Insurance Premium Tax Credit: If individuals or families purchase health insurance through the Health Insurance Marketplace, they may qualify for the new Health Insurance Premium Tax Credit. To qualify for the credit, your household income must fall between 100 percent and 400 percent of the federal poverty line, you may not be claimed as a dependent on any other taxpayer’s return, and (if married), you must file jointly. In the case of spousal abuse or abandonment, this requirement may be waived.
Individual Shared Responsibility Provision: In 2014, each individual taxpayer must carry the required “minimum essential coverage” each month, qualify for an exemption, or pay mandatory taxes. For those facing this new penalty, relief provisions have been written into the tax laws to help taxpayers transition into these new requirements. The minimum amount of insurance coverage you must carry is calculated per family member and then added together. (..Continued)