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Small Business Employee Benefits and HR Blog

A Quick Guide to the Individual Mandate Fee in 2015

December 30, 2014
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It’s probably no surprise to you that you’ll need health insurance coverage when you file your tax returns.5506576467_b0892cf304_z But, did you know that the individual mandate fee for 2015 is higher than it was last year? Furthermore, the fee increases with each year. As such, we’ve gathered important information that you need to know about the individual mandate fee. Here’s a quick guide. 

What is the Individual Mandate Fee?

It’s pretty simple. Everyone is required to have health insurance coverage, and more specifically, minimum essential coverage. If you do not have minimum essential coverage, and do not qualify for an exemption, you'll pay a fee at tax time. The requirement is also called the individual shared responsibility fee.

How Much is The Fee in 2015?

If you don’t have coverage in 2015 when tax reporting comes around, you’ll have to pay the higher of these two amounts:

  • 2% of your yearly household income. (Only the amount of income above the tax filing threshold is used to calculate the penalty. For 2015, the federal tax filing threshold is $10,150 for a person who files as a single, $20,300 for somebody who files jointly.) The maximum penalty is the national average premium for a bronze plan.

  • $325 per person for the year ($162.50 per child under 18). The maximum penalty per family using this method is $975.

Keep in mind, the fee after 2015 increases with each year. In 2016, the fee increases to 2.5% of your income or $695 per person. After that, the fee is adjusted for inflation.

See related: FAQ - Do I Have to Buy Health Insurance in 2015?

How Can You Pay the Fee?

The fee is due when you file your federal income tax return for the year you did not have coverage for. In other words, the fee you pay is taken directly from your tax return.

Since most people file their tax returns for 2014 in early 2015 and their 2015 tax returns in 2016, you’ll need to keep this in mind and make sure you have health insurance during the appropriate time to avoid the fee.  

Are There Exemptions?

Yes. You may qualify for an exemption from the individual mandate fee for 2015 if you any of the following apply to you:

  • Cannot afford coverage (defined as those who would pay more than 8% of their household income for the lowest cost bronze plan available to them through the Marketplace)

  • Are not a U.S. citizen, a U.S. national, or a resident alien lawfully present in the U.S.

  • Had a gap in coverage for less than 3 consecutive months during the year

  • The lowest-priced coverage available to you would cost more than 8% of your household income

  • Are unable to qualify for Medicaid because your state has chosen not to expand the program

  • Participate in a health care sharing ministry or are a member of a recognized religious sect with objections to health insurance

  • Are a member of a federally recognized Indian tribe

  • Are incarcerated

Others who do not qualify through these categories but have experienced a hardship that makes it difficult to purchase insurance may apply through the health insurance marketplace for an exemption to the individual responsibility requirement.

What questions do you have about the individual mandate fee for 2015? Leave a comment below!

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