New Penalty Form

How To Calculate How Much You Owe Under The Penalty

The Individual Shared Responsibility form will help you calculate how much money you have to pay if you did not have an approved healtcare plan starting in the year 2014. For people who missed the open enrollment period, which was extended all the way through March 2014, or the new extended enrollment period which runs through the end of April 2015, then you may find yourself owing for all of the year or at least part of it.

Shared Responsibility PaymentAbout six million people are finding out that they owe money to the IRS in the form of an Individual Shared Responsibility Payment that comes with its very own form, which also has a lot of fields, over 100, which need to be completed in order to determine if you will pay a $95 fine for 2014 or a higher fine for other years, up to 2.5% of your income, for failing to have the minimum essential coverage as defined under the ACA. Many people may have had employer plans or other coverage and don't need to worry, but the individual mandate specifies a penalty for failing to get the right coverage, and quite a few folks are going to find themselves spending a long time with a calculator, unless they did not have any coverage for the tax year in question, in which case they will just owe the maximum fine under the law.

Minimum Essential Coverage

Under the shared responsibility provision, people are to have had coverage since January 1, 2014, and it must be the minimum essential coverage as outlined by the IRS, including Employer Sponsored plans, policies bought from insurers, policies bought on state or federal healthcare exchanges, Medicare, Medicaid, TRICARE, CHIP, and other plans associated with government programs. If your coverage did not have the minimum requirements under the ACA, it was probably cancelled by your insurer or employer and replaced with something else. COBRA and self-insured plans are usually fine. If you can show an exemption from the individual responsibility provision, you may not have to pay a fine for some or all of the year in which you were not covered, but you should keep any documentation that backs up your excuse.

Employer Shared Responsibility Payment

Companies with over 50 employees who don't offer qualified healthcare plans for their workers may be subject to a shared responsibility payment plan as well. Regulations have been issued outlining the fines associated with failing to cover employees if your company exceeds this number or has part-time employees who meet a certain threshhold of hours. January 1, 2015 (the "employer mandate") is the beginning date for these regulations, and full time is considered over 30 hours per week. In some cases if two or more companies have the same ownership they may be seen as a combined company for the purposes of the law. Even though the employer mandate was pushed back by a year, new federal rules may mean that your company needs to cover same-sex spouses and you also must file your documents on time.