The penalty starts at the greater of $95 per person or 1 percent of income for 2014. The penalty increases to $325 or 2 percent of income in 2015. In 2016 and thereafter, the penalty increases to $695 or up to 2.5 percent of income.
Families will pay half the penalty amount for children, up to a family cap of three times the annual flat dollar amount.
Also, the penalty is capped at the national average of the annual bronze plan premium. IRS Rev. Proc. 2014-46 provides the 2014 national average of bronze plan premiums to be used when calculating the cap. The monthly national average bronze plan premium for 2014 is $204 per individual, and $1,020 for a family with five or more members (or, annually, $2,448 for individuals and $12,240 for a family with five or more members).
IRS Rev Proc. 2015-15 provides the 2015 national average of bronze plan premiums to be used when calculating the cap. The monthly national average bronze plan premium for 2015 is $207 per individual, and $1,035 for a family with five or more members (or, annually, $2,484 for individuals and $12,420 for a family with five or more members).
On July 1, 2013, the Department of Health and Human Services (HHS) released a final rule on the individual mandate, which finalized provisions in a proposed rule issued on Feb. 1, 2013. Also, on Aug. 30, 2013, the Internal Revenue Service (IRS) issued a separate final rule on the individual mandate, finalizing provisions in their proposed rule issued on Feb. 1, 2013. These final rules generally adopt the proposed standards without significant change, including:
• Exemptions from the individual mandate;
• The method for calculating the penalty; and
• Standards for designating certain coverage as constituting “minimum essential coverage.”
In conjunction with the final rules, HHS issued additional guidance specifically on the hardship exemption. The IRS issued Notice 2013-42 to provide transition relief for individuals who are eligible to enroll in employer-sponsored health plans with non-calendar year plan years, as well as related questions and answers for individuals.
Finally, on Jan. 27, 2014, the IRS published another set of proposed rules that supplement and clarify the earlier final rules, as well as Notice 2014-10 to provide transition relief from the individual mandate for months in 2014 in which individuals have certain limited-benefit health coverage that is not minimum essential coverage.