Technical Information Release

Technical Information Release  TIR 18-2: Individual Mandate Penalties for Tax Year 2018

Date: 02/13/2018
Referenced Sources: Massachusetts General Laws

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 2018 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 2018, 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).1  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.2  

These penalties apply only to adults who are deemed able to afford health insurance but who did not enroll in available coverage.  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 therefore, they should not be subject to tax penalties).3 

For 2018:

•    Individuals with incomes less than or equal 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, 2018. 
•    Penalties for individuals with incomes greater than 300% of the Federal Poverty Level will be half of the lowest priced individual Bronze premium, based on the Health Connector’s prices for these plans as of January 1, 2018.
•    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 instructing individuals to obtain health insurance.4   For tax years beginning on or after January 1, 2014, but before January 1, 2019,5  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.6   To prevent assessing a taxpayer both a Massachusetts penalty and a federal penalty, the amount of any federal health care shared responsibility payment is allowed as a reduction of the Massachusetts health care penalty owed.7 

Penalties for 2018
150.1-200% FPL 200.1-250% FPL 250.1-300% FPL Above 300% 
Penalty $22/month

* 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 $18,090 $24,120  $30,150  $36,180
2 $24,360 $32,480 $40,600 $48,720
3 $30,630 $40,840 $51,050 $61,260
4 $36,900 $49,200 $61,500 $73,800
5 $43,170 $57,560 $71,950 $86,340
6 $49,440 $65,920 $82,400 $98,880
7 $55,710 $74,280 $92,850 $111,420
8 $61,980 $82,640 $103,300 $123,960
For each additional person add: +$6,270 +$8,360 +$10,450 +$12,540

This schedule reflects the 2017 Federal Poverty Level standards (for 2018 eligibility).

    /s/Christopher C Harding
    Christopher C. Harding
    Commissioner of Revenue


February 13, 2018

TIR 18-2

Table of Contents

1.  Note that the Health Connector interprets 63 days to mean 3 calendar months. See
2.  The monthly penalties apply to each month in which an individual lacks minimum creditable coverage (i.e., lacks health insurance coverage altogether, or lacks health insurance coverage meeting minimum creditable coverage standards). For more information regarding the health care individual mandate and minimum creditable coverage, including exceptions from the mandate and appeal rights of taxpayers in connection with the penalty under G.L. c. 111M, § 2, see Department of Revenue regulation 830 CMR 111M.2.1: Health Insurance Individual Mandate; Personal Income Tax Return Requirements, and Health Connector regulations 956 CMR 6.00: Determining Affordability for the Individual Mandate and 956 CMR 5.00: Minimum Creditable Coverage.
3.  See Health Connector regulation 956 CMR 6.00: Determining Affordability for the Individual Mandate. The Affordability and Premium Schedules contained in the Massachusetts personal income tax forms are adopted by the Board of the Health Connector pursuant to 956 CMR 6.05.  
4.  The Affordable Care Act is the Patient Protection and Affordable Care Act, Public Law 111-148, and the Health Care and Education Reconciliation Act of 2010, Public Law 111-152, as amended. 
5.  Public Law 115-97 amended the Internal Revenue Code of 1986, repealing the Individual Mandate of the Affordable Care Act (ACA), thereby eliminating the “shared responsibility payment” for individuals failing to maintain minimum essential coverage.  The new law is effective for tax years beginning on or after January 1, 2019.  Pub. L. No. 115-97, § 11081, 131 Stat. 2054.
6.  See U.S. Treas. Reg. § 1.5000A. 
7.  See section 5 of 830 CMR 111M.2.1: Health Insurance Individual Mandate; Personal Income Tax Return Requirements.

Referenced Sources:

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