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Small Business Employee Benefits and HR Blog

Maximum Individual Mandate Penalty for 2014

The Internal Revenue Service (IRS) released the maximum individual mandate penalty an individual or family will pay for not having health insurance in 2014 -- $2,448 per person annually or $12,240 for a family of five.Maximum Individual Mandate Penalty 2014

Individual Mandate Penalties for 2014

The Affordable Care Act (ACA) includes a mandate requiring nearly all Americans to either have minimum health insurance coverage or else pay a penalty at tax time. This provision is commonly referred to as the individual mandate or the individual shared responsibility fee.

The penalty for not having minimum essential coverage is either a flat fee or a percentage of family income, whichever is greater. However, the penalty is capped at an amount equal to the national average premium for the lowest-cost bronze health plan available through the Health Insurance Marketplace.

For 2014, the penalty is the greater of $95 for each adult and $47.50 for each child, up to $285 per family, or 1% of family income above the federal tax filing threshold.

The maximum penalty for 2014 is $2,448 per individual annually, up to $12,240 for families of five or more.

The maximum penalty only impacts individuals without insurance whose income is above $244,800 annually. For families of five or more, the maximum penalty would impact people making a combined yearly income of $1.2 million. Those making less will still have to pay as much as 1 percent of their annual income.

The penalty is being phased in and increases over the first three years (2014 to 2016). By 2016, the penalty is increased to the greater of $695 for each adult and $347.50 for each child, up to $2,085 per family, or 2.5% of family income above the federal tax filing threshold.

See also: Individual Mandate FAQs on Fines, Coverage and Exemptions

Source: IRS (Rev. Proc. 2014-46) 

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