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Small Business Employee Benefits and HR Blog

ACA Individual Mandate: Exemption for Native Americans Broadened

Starting in January 2014, the Affordable Care Act (ACA) requires most individuals to either have health insurance, or else pay a tax penalty. This provision is commonly referred to as the individual mandate. We say "most individuals" because the ACA outlined several exemptions to the individual mandate, including an exemption for members of Native American tribes. 

Exemption for Native Americans Broadened

A final rule on individual mandate penalty exemptions was released in June 2013, and broadened the exemption for Native Americans.

Under the final rule, the exemption for Native Americans was expanded from "member of Native American tribe" to those eligible to receive medical care through the federal Indian Health Service.

Summary of Individual Mandate Penalty Exemptions

What other exemptions exist? The final rule outlined the following exemptions from the individual mandate:

  • Low-income individuals (people with incomes below the threshold required for filing taxes, equivalent to $9,750 for a single person in 2012 and $27,100 for a married couple with two children)

  • Undocumented immigrants

  • Indian tribal members and their dependents

  • Individuals who cannot afford coverage (required to spend more than 8% of their income for health insurance)

  • Individuals with a coverage gap of three or fewer months

  • Members of certain religious groups or health care sharing ministries

  • Incarcerated individuals

  • Low-income individuals in states that have opted out of the Medicaid expansion 

  • Individuals with no plan options in their state's health insurance marketplace

Click here to read the final rule.

Summary of Individual Mandate Penalties

If an individual does not fall into one of the individual mandate exemptions, they will likely pay a tax penalty for not being covered. How much is the penalty?

The penalty is phased-in over three years:

  • In 2014, the penalty will be $95 per person up to a maximum of three times that amount for a family ($285)* or 1% of household income if greater.

  • In 2015, the penalty will be $325 per person up to a maximum of three times that amount for a family ($975)* or 2% of household income if greater.

  • In 2016, the penalty will be $695 per person per year up to a maximum of three times that amount for a family ($2,085)* or 2.5% of household income if greater.

Beginning in 2017, the penalties will be increased by the cost-of-living adjustment. Each year, the penalty is capped at an amount equal to the national average premium for bronze level health plans offered through state exchanges.

For more information on the individual mandate and the individual tax penalty see:

  • How to Avoid the Individual Health Insurance Mandate "Tax" (a humorous look at the individual mandate)

  • Individual Health Insurance Mandate Tax Penalty FAQ