ACA again - Question about the penalty

[Tax Prep by Deb]

Trying to get a pulse on the penalty aspect of ACA.  Most of my clients will be insured but I do have a few who are stubborn.

 

I'm confused a bit.  I know that there is a maximum amount a family will be charged, I believe it's 285.

But what if this is a single individual with no dependents?

 

For example his MAGI is $36,000?  I know there is $95.00 minimum 1% or $360.00, but is there a maximum for a single person?

 

Tried several different research areas, but only ended up more confused.  No one addresses the single guy!

[jklcpa]

Info from healthcare.gov (below), I think your client would owe a penalty of $259. This is based on the excess AGI over the filing threshold of $25850 * 1%.
 
The fee in 2014 and beyond

 

• The penalty in 2014 is calculated one of 2 ways. If you or your dependents don’t have insurance that qualifies as minimum essential coverage you'll pay whichever of these amounts is higher:
•     1% of your yearly household income. (Only the amount of income above the tax filing threshold, $10,150 for an individual, is used to calculate the penalty.) The maximum penalty is the national average premium for a bronze plan.
•     $95 per person for the year ($47.50 per child under 18). The maximum penalty per family using this method is $285.
• The way the penalty is calculated, a single adult with household income below $19,650 would pay the $95 flat rate. A single adult with household income above $19,650 would pay an amount based on the 1% rate. (If income is below $10,150, no penalty is owed.)
• The penalty increases every year. In 2015 it’s 2% of income or $325 per person. In 2016 and later years it’s 2.5% of income or $695 per person. After that it's adjusted for inflation.
• If you’re uninsured for just part of the year, 1/12 of the yearly penalty applies to each month you’re uninsured. If you’re uninsured for less than 3 months, you don’t have to make a payment.
• You’ll pay the fee on your 2014 federal income tax return. Most people will file this return in 2015.
• Learn more about the individual shared responsibility payment from the Internal Revenue Service.

 

Link to page where I took excerpt above: https://www.healthcare.gov/what-if-i-dont-have-health-coverage/

 

Link to the IRS site for an overview of the shared responsibility payment: http://www.irs.gov/uac/Newsroom/The-Individual-Shared-Responsibility-Payment-An-Overview

Edited September 6, 2014 by jklcpa
added links

[Lion EA]

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[Jack from Ohio]

When answering the questions for anyone NOT receiving insurance from one of the marketplaces, There is no process for documentation of the answers. The IRS has stated that it will not investigate, match or otherwise look at the answers to that question.

The only people on the hook are those that receive a 1099-A from their marketplace obtained insurance plan. My process is going to be to ask the client yes or no, record their answer and move forward. I will not discuss any other facets of their insurance situation. Only those who have insurance from the marketplace need provide more than a yes or no.