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What You Need to Know about the Shared Responsibility Payment

The Shared Responsibility Payment is the fee that you need to pay if you do not have health insurance for any month, starting 2014. The shared responsibility payment is to be paid when filing your 2014 taxes. The payment can lower your tax refund, or increase your tax bill for 2014.

It was mandatory for every U.S. citizen and non-U.S. citizens living in the U.S. to have healthcare coverage beginning in 2014. However, individuals who have an exemption from having health coverage are not required to pay the shared responsibility payment.

Individual Shared Responsibility Provision

According to the individual shared responsibility provision, beginning 2014, every person living in the U.S. is required to have either:

  • Minimum essential coverage for each month,
  • Qualify for an exemption, or
  • Make the payment when filing your tax return

If the payment is due but not paid, the IRS may charge the taxpayer a penalty for non-compliance. However, if you qualify for the hardship exemption issued by the IRS, you can then claim this on your tax return to avoid paying the shared responsibility payment.

Calculating the Shared Responsibility Payment

The amount to be paid for the shared responsibility payment is either a percentage of your income or a flat dollar amount, whichever is greater. If you are not covered and not exempt, then you will owe 1/12th of the annual payment for each month you (or your dependents) are not covered. The annual payment amount for 2014 is the greater of:

  • 1 percent of your household income that is above the tax return threshold for your filing status, or
  • The flat dollar amount, which is $95 per adult and $47.50 per child, limited to a maximum of $285.

To calculate your shared responsibility payment, you may use this IRS page.