Individual shared responsibility provision


The individual shared responsibility provision, less formally known as the individual mandate, is the health insurance mandate imposed on individuals by the Affordable Care Act in the United States. This individual mandate requires most individuals and their families to have a certain minimal amount of health insurance, with certain exemptions. Otherwise, they are required to pay the individual shared responsibility payment as a fine. The corresponding payment is the individual shared responsibility payment. It is one of the many Affordable Care Act tax provisions. The federal tax penalty for violating the mandate was zeroed out by the Tax Cuts and Jobs Act of 2017, starting in 2019..

Summary

Starting January 2014, individuals and their families must have at least minimum essential coverage. Individuals may be exempt from health insurance coverage in some cases:
Individuals and their families who have no health insurance, are required to make the shared responsibility payment.

History

The Patient Protection and Affordable Care Act signed in 2010 imposed a health insurance mandate to take effect in 2014. On June 28, 2012, the Supreme Court of the United States upheld the health insurance mandate as a valid tax, in the case of National Federation of Independent Business v. Sebelius and thus within Congress' taxing power.
The federal tax penalty for violating the mandate was zeroed out by the Tax Cuts and Jobs Act of 2017, starting in 2019.. This raised questions about whether the Affordable Care Act was still constitutional.

Minimum essential coverage

Whether health care coverage qualifies as minimum essential coverage depends largely on the type of coverage it is. Most coverage that people have is considered to be minimum essential coverage. However, coverage providing only limited benefits does not qualify as minimum essential coverage.
Coverage typeExamplesQualifies as minimum
essential coverage?
Employer-sponsored coverage
  • Group health insurance coverage for employees under a governmental plan, such as the Federal Employees Health Benefit program
  • A self-insured group health plan for employees
  • Retiree coverage
Yes
Individual health coverage
  • Health insurance purchased directly from an insurance company
  • Health insurance purchased through the health insurance marketplace
  • Health insurance provided through a student health plan
    		• Yes
    Coverage under government-sponsored programs
  • Medicare Part A coverage
  • Medicare Advantage plans
  • Most Medicaid coverage
  • Coverage through a Basic Health Program standard health plan
    		• Yes
    Coverage that provides limited benefits
  • Coverage consisting solely of excepted benefits, such as stand-alone dental, vision, accident, or disability insurance
  • Medicaid providing only a single service, for example, providing only family planning services
  • Some TRICARE coverage
    		• No

    Coverage exemption

    If individuals or anyone in their families claim an exemption from minimum essential coverage, individuals are not required to make a shared responsibility payment. If individuals have a gross income below the tax return filing threshold for a certain year, they are automatically exempt from the shared responsibility provision for that year.
    Most exemptions are claimed using Form 8965, Health Coverage Exemptions, when a tax return is filed. However, certain exemptions must be granted by the health insurance marketplace in advance, like coverage exemptions for certain hardship situations and for members of certain religious sects.
    ExemptionsGranted by marketplace,
    claimed on tax return, or either
    Coverage is considered unaffordableTax return
    Income below the return filing thresholdTax return
    Citizens living abroadTax return
    NonresidentsTax return
    Member of Indian tribeEither
    Member of certain religious sectsMarketplace
    General hardshipMarketplace
    Resident of a state that did not expand MedicaidEither

    Shared responsibility payment (eliminated as of tax year 2019)

    Individuals without minimum essential coverage were required to make the shared responsibility payment until the end of tax year 2018, unless they qualified for exemptions. When the Tax Cuts and Jobs Act went into effect in 2018, it eliminated this tax penalty as of tax year 2019. The worksheets located in the instructions to Form 8965, Health Coverage Exemptions, could be used to figure the shared responsibility payment amount that was due while still in effect. The annual payment amount was a percentage of the household income in excess of the return filing threshold or a flat dollar amount, whichever was greater.