IRS-Proposed Health Care Reform Act Regulations Tell Who Must Pay for Coverage

health care reform actYears after the health care reform act was passed and months after the Supreme Court deemed it constitutional to penalize American consumers who do not purchase health insurance by the year 2014, the IRS has released regulations concerning the law.

While the regulations are under proposal at the moment, they undoubtedly clarify who could be subject to the tax that could cost Americans hundreds if they don’t purchase coverage.

Health Care Reform Act Requires “Shared Responsibility”

The IRS released 73 pages of proposed regulations relating to United States citizens’ responsibilities to the Affordable Care Act (ACA), which was passed in March 2010.

Under the terms of the health care reform act, there is a “shared responsibility to reform and improve the availability, quality, and affordability of the health insurance coverage in the United States.”

Individuals’ responsibilities are to maintain “minimum essential coverage” for themselves and any non-exempt family members. If they don’t purchase minimum coverage, they will have to make a “shared responsibility payment,” which is in essence a penalty.

What Qualifies as Minimum Essential Coverage?

According to the proposal presented by the IRS, there are a number of ways that consumers could acquire the minimum essential coverage to meet the guidelines of the ACA:

  • Acquire coverage under a specified government sponsored program (Medicare, Medicaid or similar)
  • Buy coverage under an eligible employer-sponsored plan
  • Purchase coverage under a health plan offered in the individual market within a state
  • Already have coverage under a grandfathered health plan

Other health benefits coverage recognized by the Secretary of Health and Human Services (HHS) could also qualify as minimum essential coverage. The HHS is currently proposing rules to provide standards for determining which types of health insurance could qualify as meeting the health care reform act’s minimum coverage.

Who Doesn’t Have to Purchase Health Insurance?

Under the proposed regulations, consumers would need to purchase the lowest cost plan available via health insurance exchanges to avoid a penalty; that is unless they qualify for an exemption.

Consumers could qualify for exemptions if:

  • The health care reform act is contrary to religious beliefs (this must be proven via an established church or religious sect).
  • They are not citizens or nationals of the United States, nor aliens lawfully present in the United States.
  • They are incarcerated (except for incarceration pending the disposition of charges).
  • They do not have an affordable health insurance coverage option available.

Individuals who don’t qualify for an exemption and choose not to purchase health insurance could pay shared responsibility payments of roughly $95 in 2014 ($285 for families), $325 in 2015 ($975 for families) and $625 in 2016 ($2,085 for families).

The good news is that consumers who don’t pay won’t be subject to criminal prosecution or penalty and won’t have a notice of lien filed against property. In most cases, people would instead have their tax refunds intercepted.

The IRS is seeking public comment on these proposed rules until May 2, 2013. Comments may be sent via mail, submitted in person, or emailed via the Federal eRulemaking Portal at