This week, the Internal Revenue Service released final regulations along with a fact sheet, both detailing the so-called “shared responsibility requirement” (also called the individual mandate) under the Affordable Care Act.
These rules lay out what constitutes the “minimum essential coverage” (MEC) that individuals must maintain in order to avoid owing a tax penalty to the federal government, and lists exemptions from the requirement under certain circumstances. The individual mandate is due to take effect Jan. 1, 2014, unlike the employer mandate, which was delayed for one year.
The 75-page rule largely codifies a previous draft rule from February, with a few new details. The regulations define MEC as employer-sponsored health plans; plans purchased through the new health insurance exchanges; grandfathered health plans; and coverage under government programs such as Medicare and Medicaid. The rule clarifies that self-insured group health plans qualify as MEC as well. Any individual with coverage from these sources will not owe a tax penalty. In addition, those who would have qualified for Medicaid but live in a state that opted not to expand to 133% of the poverty level will also be exempt from the penalty.
The new regulations added a few additional twists as they stipulate that individuals are responsible for tax penalties owed by spouses, children and other dependents. In addition, in order to avoid owing a tax penalty, an individual must have coverage for at least one day per month for at least nine months out of the year.
Lastly, the regulation reaffirmed exemptions from the mandate for certain individuals. Among these are individuals who cannot afford coverage or do not earn enough income to file a federal tax return, as well as incarcerated persons or members of Native America Tribes.
Ryan Young is Big “I” senior director of federal government affairs.