Individual ACA Penalty Calculator

Individual Penalty Calculator

ImageBeginning in 2014, the “individual mandate” of the Affordable Care Act (ACA) requires all U.S citizens and legal residents (who are not in an exempt category) to have minimum essential coverage (MEC) or pay a penalty via their federal tax return (referred to as Individual Shared Responsibility).This individual penalty is not tax-deductible.

ImageThe “individual mandate” penalty is sometimes referred to as “only $95” for 2014. That is not the full story. The actual penalty calculation is more complicated so we have provided this calculator to help you. determine an accurate estimated penalty for each of your valued clients’ unique situations.

The basis for this calculation is the following penalty schedule:

  • 2014: Greater of $95/adult, $47.50/child (maximum $285 per family) – or – 1.0% of taxable household income
  • 2015: Greater of $325/adult, $162.50/child (maximum $975 per family) – or – 2.0% of taxable household income
  • 2016: Greater of $695/adult, $347.50/child (maximum $2085 per family) – or – 2.5% of taxable           household income
  • 2017 & Thereafter: The penalty will be increased annually by a cost-of-living adjustment

How to Use The Individual Penalty CalculatorImage
The Individual Penalty Calculator includes two tabs:

  1. Tab 1 – Individual Penalty Calculator (Worksheet)
    Enter information for your individual client as indicated on worksheet. Based on the information entered an individual will be able to see an estimate of what the penalty will be in 2014, 2015 or 2016. Use the results of this calculation to compare the non-tax deductible individual penalty to the cost of guarantee issue individual coverage available beginning 1/1/2014 both in the Covered California Individual Marketplace (Exchange) and outside of the Marketplace (Exchange).
  2. Tab 2 – IRS 2012 Filing Requirements Chart 
    Use this chart to determine whether or not you client’s household income meets the IRS filing threshold. If your client’s household income does not meet or exceed the IRS threshold the client is exempt from the individual penalty. (This 2012 chart is based on the most current information available from the IRS at this time. When the IRS publishes the 2013 information we will update this chart.)

Note: Exemptions will be granted for those without coverage for less than three months, undocumented immigrants, incarcerated individuals, those with certain religious beliefs and those for whom the lowest cost plan option exceeds 8% of income. On 6/26/2013 the IRS Issued Transition Relief for Employees and Related Individuals Eligible to Enroll in Eligible Employer-Sponsored Health Plans for Non-Calendar Plan Years That Begin in 2013 and End in 2014. See footnote on our calculator (Tab 1) or read the IRS Notice for more details http://www.irs.gov/pub/irs-drop/n-13-42.pdf

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