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Technical Information Release

Technical Information Release TIR 14-3: Individual Mandate Penalties for Tax Year 2014

Date: 03/20/2014
Organization: Massachusetts Department of Revenue
Referenced Sources: Massachusetts General Laws

Personal Income Tax

TIR 14-3 updates and replaces TIR 14-1

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 2014 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 2014, 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 Health 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 Health Connector.[1] 

These penalties apply only to adults who are deemed able to afford health insurance. On an annual basis, the Health 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 Health Connector asserting that hardship prevented them from purchasing health insurance (and, thus, that they should not be subject to tax penalties).[2]

For 2014:

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 ConnectorCare health insurance.
 

  • Penalties for individuals with incomes from 150.1 to 300% of the Federal Poverty Level will be half of the lowest priced ConnectorCare enrollee premium that could be charged to an individual at the corresponding income level, based on the ConnectorCare enrollee premiums as of January 1, 2014.
  • Penalties for individuals with incomes greater than 300% of the Federal Poverty Level:
    • ages 18-30:  half of the lowest priced individual Catastrophic Plan offered through the Health Connector; and 
    • ages 31 and above:  half of the lowest priced individual Bronze premium, based on the Health Connector’s prices for these plans as of January 1, 2014.
  • The Department anticipates issuing an updated penalty schedule for tax year 2015.
  • 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.
  • Interaction with Federal Health Care Shared Responsibility Payment. Beginning January 1, 2014, the Affordable Care Act instituted a federal mandate on individuals to obtain health insurance.[3] For tax years beginning on or after January 1, 2014, if a nonexempt individual fails to obtain health insurance meeting federal standards, the person is liable for a “shared responsibility payment” that must be reported on his or her federal income tax return.[4] To provide guidance on the interaction of the Massachusetts individual mandate with the federal mandate to obtain health insurance, the Department of Revenue plans to amend its regulation, 830 CMR 111M.2.1: Health Insurance Individual Mandate; Personal Income Tax Return Requirements. In particular, these amendments would create a credit against any Massachusetts health care penalty owed for the amount of any federal health care shared responsibility payment, so as to prevent aggregated federal and state penalties.  

Penalties for 2014

Individual
Income
Category*

150.1-200%
FPL

200.1-250%
FPL

250.1-300%
FPL

Above
300% FPL
Age 18-30

Above
300% FPL
Age 31+

Penalty

$20/month
$240/year

$39/month
$468/year

$59/month
$708/year

$58/month
$696/year

$92/month
$1,104/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

$17,508

$23,340

$29,184

$35,016

2

$23,604

$31,464

$39,336

$47,196

3

$29,688

$39,588

$49,476

$59,376

4

$35,784

$47,700

$59,628

$71,556

5

$41,868

$55,824

$69,780

$83,736

6

$47,964

$63,948

$79,932

$95,916

7

$54,048

$72,060

$90,084

$108,096

8

$60,144

$80,184

$100,236

$120,276

For each additional person add

+$6,096

+$8,124

+$10,152

+$12,180

This schedule reflects the Federal Poverty Level standards for 2014.


/s/Amy Pitter
Amy Pitter
Commissioner of Revenue


AP:MTF:adh

March 20, 2014

TIR 14-3

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