Several groups of people who are exempted from the individual mandate: Individuals for whom coverage is too expensive. If an employee is eligible for coverage but his or her share of the premium exceeds 8% of the household’s AGI, the penalty tax doesn’t apply. Ditto for folks who are ineligible for employer coverage if the cost of a basic bronze-level plan in an exchange, less any federal tax credit for buying insurance, exceeds 8% of the household AGI.
Members of households where totally income is below the level needed to file a tax return are also exempted. Filers who go without coverage for periods of less than three months. People who can show that hardship forced them to go without coverage. And members of religious groups opposed to private or public insurance.
The tax for being uninsured is normally the higher of two amounts. The basic penalty or an income-based levy. The basic penalty is $95 a person for 2014 ($47.50 for each family member under the age of 18), with a $285 ceiling. The income-bases penalty is 1% of the excess of the taxpayer’s household GAGI over the minimum level of AGI needed to trigger filing a tax return. In either case, the tax s reduced proportionally for any months that taxpayer had coverage.
Both of these levies scheduled to be significantly higher in 2015 and 2016. But in no case can the tax exceed the cost of a bronze-level exchange plan for the taxpayer ad family members, also adjusted for months with healthy coverage. The tax is paid annually on 1040. So 2014’s levy is paid in early 2015.