Individual health coverage requirement

Tax Penalties Beginning Jan. 1, 2014, U.S. citizens and legal residents will be required to have qualifying ​health coverage. Those without coverage will face a tax penalty of the greater of a flat fee or a percentage of household income. The penalty will be phased in according to the following schedule:


Flat Fee




$95 (up to $285 for a family)


1.0% of taxable income


$325 (up to $975 for a family)


2.0% of taxable income



$695 (up to $2,085 for a family)


2.5% of taxable income

Exemptions will be granted for people who can’t afford health insurance (those for whom the lowest cost plan option exceeds 8% of an individual’s household income, and those with incomes below the tax filing threshold — $9,350 for singles taxpayers under age 65 in 2009 and $18,700 for couples). Exemptions will also apply to those who raise religious objections, American Indians, those without coverage for less than three months, undocumented immigrants, and incarcerated individuals. (Kaiser Family Foundation, Focus on Health Reform)

Premium Credits The PPACA attempts to make buying health insurance through state health insurance exchanges more affordable by offering premium credits to people with lower incomes. Premium credits will be available to individuals and families with incomes between 133% and 400% of the federal poverty level (between $29,326.50 and $88,200 for a family of four in 2010) to purchase insurance through the exchanges. The premium credits will be provided based on a sliding scale and will kick in only after an individual has spent the set percentage of household income on health insurance premiums.

Household income as a % of FPL

Limits on Individual's Contribution to Premiums


3-4% of income


4-6.3% of income


6.3-8.05% of income


8.05-9.5% of income


9.5% of income

Other Documents

  • CBPP: Premium and Cost-Sharing Credits web
    A two-page description of new premium credits and cost-sharing credits available to individuals purchasing health insurance through the state exchanges