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Technical Information Release

Technical Information Release TIR 11-9: Individual Mandate Penalties for Tax Year 2011

Date: 08/11/2011
Organization: Massachusetts Department of Revenue
Referenced Sources: Massachusetts General Laws

Personal Income Tax

TIR 11-9 updates and replaces TIR 10-25
 

Pursuant to G.L. c. 111M, § 2, the Department of Revenue is issuing this Technical Information Release to announce the penalty schedule for individuals who fail to comply in 2011 with the requirements under the Massachusetts Health Care Reform Act (the Act). See St. 2006, c. 58, as amended. The Act requires most adults 18 and over with access to affordable health insurance to obtain it. In 2011, individuals must be enrolled in health insurance policies that meet minimum creditable coverage standards defined in regulations adopted by the Commonwealth Health Insurance Connector Authority (the Connector). Individuals who are deemed able to afford health insurance but fail to comply are subject to penalties for each month of non-compliance in the tax year (provided that there is no penalty in the case of a lapse in coverage of 63 consecutive days or less). The penalties, which will be imposed through the individual's personal income tax return, shall not exceed 50% of the minimum monthly insurance premium for which an individual would have qualified through the Connector. [1]
 

These penalties apply only to adults who are deemed able to afford health insurance. On an annual basis, the Connector establishes separate standards that determine whether individuals, married couples and families can afford health insurance, based on their incomes and affordable health insurance premiums. Those who are not deemed able to afford health insurance pursuant to these standards will not be penalized. Individuals also have the opportunity to file appeals with the Connector asserting that hardship prevented them from purchasing health insurance (and thus that they should not be subject to tax penalties). [2]
 

For 2011 
 

  • Individuals with incomes up to 150% of the Federal Poverty Level are not subject to any penalty for non-compliance, as those at this income level are not required to pay an enrollee premium for Commonwealth Care health insurance.
     
  • Penalties for individuals with incomes from 150.1 to 300% of the Federal Poverty Level will be half of the lowest priced Commonwealth Care enrollee premium that could be charged to an individual at the corresponding income level, based on the Connector's Commonwealth Care enrollee premiums as of January 1, 2011.
     
  • Penalties for individuals with incomes greater than 300% of the Federal Poverty Level will be:
     
    • ages 18-26: half of the lowest priced individual Commonwealth Choice Young Adult Plan premium without drug coverage; and
    • ages 27 and above: half of the lowest priced individual Commonwealth Choice Bronze premium with drug coverage,

based on the Connector's prices for these plans as of January 1, 2011.
 

  • The Department anticipates issuing an updated penalty schedule for tax year 2012.
     
  • Penalties for married couples who do not comply with the individual mandate rules (with or without children) will equal the sum of individual penalties for each spouse.
     

Penalties for 2011

Individual

Income

Category*

150.1-200% FPL

200.1-250% FPL

250.1-300% FPL

Above 300% FPL

Age 18-26

Above 300% FPL Age 27+

Penalty

$19/month

$228/year

$38/month

$456/year

$58/month

$696/year

$72/month

$864/year

$101/month

$1,212/year

* Compare individual's annual family household income to chart immediately below to determine applicable Federal Poverty Level (FPL).
** Yearly penalty amounts listed above based on non-compliance for entire year.
 

Federal Poverty Level - Annual Income Standards
 

Family Size

150% FPL

200% FPL

250% FPL

300% FPL

1

$16,344

$21,780

$27,228

$32,676

2

$22,068

$29,424

$36,780

$44,136

3

$27,804

$37,068

$46,332

$55,596

4

$33,528

$44,700

$55,884

$67,056

5

$39,264

$52,344

$65,436

$78,516

6

$44,988

$59,988

$74,976

$89,976

7

$50,724

$67,620

$84,528

$101,436

8

$56,448

$75,264

$94,080

$112,896

For each additional person add

+$5,736

+$7,644

+$9,552

+11,460

This Schedule reflects the Federal Poverty Level standards for 2011.
 

/s/Navjeet K. Bal
Navjeet K. Bal
Commissioner of Revenue
 

NKB:MTF:adh
 

August 30, 2011

TIR 11-9

Referenced Sources:

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