Beginning
January 2014, nonexempt U.S. citizens and legal residents are required to
maintain minimum essential coverage. Minimum essential coverage can include
government-sponsored programs, eligible employer-sponsored plans, plans in the
individual market, grandfathered group health plans, and other coverage as
recognized by the Secretary of Health and Human Services (HHS), in coordination
with the Secretary of the Treasury. Government-sponsored programs include
Medicare, Medicaid, Children’s Health Insurance Program, coverage for members
of the U.S. military, veteran’s health care, and health care for Peace Corps
volunteers. Eligible employer-sponsored plans include governmental plans,
church plans, grandfathered plans, COBRA coverage, retiree coverage, and other
group health plans offered in the small or large group market within a state.
Penalty
Individuals who fail to maintain minimum essential
coverage are subject to a penalty tax equal to the lesser of:
• The
sum of the monthly penalty amounts for months in the taxable year during which
one or more failures occurred, or
• An
amount equal to the national average annual premium for the bronze level health
plan offered through the state
health insurance exchange that year for the
household size.
For 2014, the maximum penalty is the greater of $95
or 1% of the excess of household income over the threshold amount ($325 or 2%
for 2016).
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