Chapter 1 INDIVIDUAL SHARED RESPONSIBILITY PAYMENTS AND PREMIUM TAX CREDITS FOR INDIVIDUALS

LEARNING OBJECTIVES

After completing this chapter, you should be able to do the following:

  • Identify what insurance qualifies as minimum essential coverage.
  • Identify exemptions from individual shared responsibility payments when individuals do not have minimum essential coverage.
  • Estimate the individual shared responsibility penalty under different assumptions about income and family size.
  • Identify factors affecting eligibility for premium tax credits under the Patient Protection and Affordable Care Act (ACA).
  • Estimate premium tax credit under different income levels.
  • Calculate amount of premium tax credits that must be reconciled to income tax returns.

Individual Shared-Responsibility Payments

Effective in 2014, the ACA requires most individuals to have health insurance coverage or potentially be subject to an individual shared responsibility payment.1 Individuals will be required to maintain minimum essential health insurance coverage for themselves and their dependents. For example, those individuals who do not maintain minimum essential coverage will be required to pay the individual shared responsibility payment when filing taxes in 2017 based on their insurance status in 2016. There are, however, exemptions from the individual shared responsibility payments for certain hardships (for example, low income) and other factors, including religious exemptions. The first half of ...

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