Under the Affordable Care Act, the federal government, states, insurers, employers, and individuals share the responsibility to reform and improve the availability, quality, and affordability of health insurance coverage in the United States.  Starting in 2014, the individual shared responsibility provision calls for each individual to have health insurance coverage (known as minimum essential coverage), qualify for an exemption, or make a shared responsibility payment when filing a federal income tax return.  Individuals will not have to make a shared responsibility payment if coverage is unaffordable, if they spend less than three consecutive months without coverage, or if they qualify for an exemption based on hardship, religious beliefs, or certain other factors.  In order to help make coverage affordable for millions of American families, the Affordable Care Act also provides a premium tax credit to eligible Americans to help pay for the cost of health care coverage purchased on Health Insurance Marketplaces.

On June 26, the Centers for Medicare & Medicaid Services at the Department of Health and Human Services (HHS) issued a final regulation explaining the eligibility rules for receiving an exemption from the individual shared responsibility provision through a Health Insurance Marketplace, as well as two subcategories of exemptions that will be available through the tax filing process.  HHS’ final regulation includes rules that will ease implementation and help to ensure that the shared responsibility payment obligation applies only to the limited group of taxpayers who have ready access to affordable coverage but choose to spend a substantial period of time uninsured.

At the same time, the Treasury Department and Internal Revenue Service are releasing two notices related to minimum essential coverage.  The first notice provides guidance on when, for purposes of the premium tax credit, an individual is treated as eligible for specific types of minimum essential coverage (and therefore is not eligible for a tax credit).  For example, the guidance provides that an individual subject to a waiting period before he can enroll in the Children’s Health Insurance Program (CHIP) is not treated as eligible for CHIP and therefore may receive a premium tax credit during that waiting period.  The second notice provides transition relief for individuals offered employer-sponsored coverage that follows a non-calendar plan year.  Under this transition relief, employees and dependents eligible for such coverage are generally exempt from the individual shared responsibility provision until the new plan year begins in 2014.

According to the Congressional Budget Office, less than two percent of Americans are expected to owe a shared responsibility payment.

Read the entire press release here.

Read the Federal Register article here.

Read the Treasury Notice here.