Obamacare ‘Shared Responsibility’ Rules Released

By  //  August 30, 2013

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Earlier this week the U.S. Department of the Treasury released a final rule governing how U.S. residents who fail to comply with the Patient Protection and Affordable Care Act’s (PPACA, aka Obamacare) individual mandate will be penalized once the provision takes effect in 2014, and who will be exempt from the mandate.

The voluminous PPACA’s final rules governing the individual mandate’s criteria, penalties and exemptions were released early this week.

A centerpiece of Obamacare is a requirement that all individuals carry some minimum health insurance or pay a tax. The new system aims to provide insurance through state marketplaces and subsidies for tens of millions of Americans who are otherwise uninsured.

The rationale for the individual mandate is clearly stated in the Treasury Department’s final rule “Fact Sheet:”

“Under the Affordable Care Act, the government, insurers, employers, and individuals share in the responsibility to improve the availability, quality, and affordability of health insurance coverage.  The individual responsibility provision is integral to delivering the Affordable Care Act’s consumer protections at an affordable cost. This includes protections like the prohibition on pre-existing condition exclusions and the guarantee that all Americans can’t be denied coverage.  It makes these protections possible by ensuring that individuals do not just wait to purchase insurance when they are sick and drop coverage when they are well – driving up premiums for everyone. “


(Image by Kaiser Family Foundation)

According to the fact sheet, individuals will be required to report whether they had health insurance in 2014 on their fiscal year 2015 tax returns. Non-exempt individuals who failed to purchase insurance will be required to pay a tax penalty, which would apply only to the group of taxpayers who choose to spend a substantial period of time without coverage despite having ready access to affordable coverage.

The law requires individuals to obtain coverage if they don’t already have it as of Jan. 1.

The Congressional Budget Office projects that less than two percent of Americans are expected to choose to go without coverage and will owe a “shared responsibility payment” based on the following:

  • $95 or 1 percent of the household income, whichever is greater, in 2014; and
  • $695 or 2.5 percent of taxable annual income, with the total amount increasing with inflation, in 2016 and beyond.

It is thought by some that the mandate tax is relatively small, and will have even less impact over time because the gap between the mandate tax and the cost of health insurance will continue to widen, incentivizing more people to go without coverage and pay the lesser tax.


Specific exemptions from the shared responsibility payment are clearly defined in the final rule. The exemptions apply to any taxpayer for whom coverage is unaffordable, who has other good cause for going without coverage, or who goes without coverage for only a short time.

Members of American Indian tribes, in Florida the Seminoles and Miccosukee, are exempt from the individual shared responsibility payments as prescribed in the PPACA. This is in part because the Indian Health Service offers government-run health care to members of such tribes.

The regulations include the following exemptions:

  • Individuals with incomes below the threshold required to file a tax return, or about $10,000 for an individual in 2013;
  • Individuals who need to buy insurance on their own and the cost of their coverage is more than 8 percent of their household income;
  • Individuals who already qualify for certain religious exemptions;
  • Members of American Indian tribes (Seminole and Miccosukee tribes in Florida) ;
  • Individuals who lacked insurance for fewer than three months of a given year;
  • Individuals who refused coverage for religious reasons;
  • Members of a health care sharing ministry;
  • Undocumented immigrants; and
  • Incarcerated adults.


Last spring, after lengthy debate and deliberation, the Florida legislature voted not to expand Medicaid under the provisions in the PPACA, which would have provided Medicaid coverage for approximately one million low-income adults partially funded with an estimated 51 billion federal dollars over ten years.

Under the final rules, these low-income uninsured Floridians who are under the federal poverty level but who have been left out of the state’s Medicaid program are spared from paying any penalty for not having health coverage under the Affordable Care Act as of Jan. 1.