As we reach year end and start to think about the approaching tax season, it’s important to keep up to date on tax-related items in the Affordable Care Act (ACA). To assist you in that, I’m sharing this article from Patrick Whitaker at Whitaker Financial Services. You can find more information on his website.
The Affordable Care Act’s individual mandate provision requires every individual to have minimum essential health coverage for each month, qualify for an exemption, or make a penalty payment when filing his or her federal income tax return. Recently, the Internal Revenue Service (IRS) issued Revenue Procedure 2016-43, which provides the information needed to determine the maximum penalty that may be due for 2016.
Calculating the Payment
For tax year 2016, individuals will generally pay whichever of the following penalty amount is higher:
- 2.5% of the individual’s yearly household income above his/her applicable filing threshold, OR
- $695 per person for the year ($347.50 per child under age 18)
The maximum penalty is capped at the cost of the national average premium for a bronze-level health plan available through a Health Insurance Marketplace in 2016. According to the IRS, the monthly national average premium for qualified health plans that have a bronze level of coverage and are offered through a Health Insurance Marketplace in 2016 is:
- $223 per individual; and
- $1,115 for a family with five or more members
See the Health Care Reform Updates section on our website for additional articles related to the Affordable Care Act.
About the author, Patrick Whitaker
Whitaker Financial Services has been providing professional financial and insurance services for over 25 years. At WFS, it’s our business to help you plan ahead. The most important point we make with clients is this: strategy is everything. We offer business owners an alternative to the impersonal treatment they receive from the large brokerage agencies. The benefits programs you invest in affect multiple facets of your business, from company morale, to employee retention, to administrative efficiency, to your bottom line.