Individual Mandate Under ACA
Annie L. Mach
Analyst in Health Care Financing
March 6, 2014
Congressional Research Service
7-5700
www.crs.gov
R41331


Individual Mandate Under ACA

Summary
Beginning in 2014, ACA requires most individuals to maintain health insurance coverage or
otherwise pay a penalty. Specifically, most individuals will be required to maintain minimum
essential coverage, which is a term defined in ACA and its implementing regulations and includes
most private and public coverage (e.g., employer-sponsored coverage, individual coverage,
Medicare, and Medicaid, among others). Some individuals will be exempt from the mandate and
the penalty, while others may receive financial assistance to help them pay for the cost of health
insurance coverage and the costs associated with using health care services.
Individuals who do not maintain minimum essential coverage and are not exempt from the
mandate will have to pay a penalty for each month of noncompliance with the mandate. The
penalty is the greater of a flat dollar amount or a percentage of applicable income. In 2014, the
annual penalty is the greater of $95 or 1% of applicable income; the penalty increases in 2015 and
2016 and is adjusted for inflation thereafter. The penalty will be collected through federal income
tax returns. The Internal Revenue Service (IRS) can attempt to collect any owed penalties by
reducing the amount of an individual’s tax refund; however, individuals who fail to pay the
penalty will not be subject to any criminal prosecution or penalty for such failure. The Secretary
of the Treasury cannot file notice of lien or file a levy on any property for a taxpayer who does
not pay the penalty.
Certain individuals will be exempt from the individual mandate and the penalty. For example,
individuals with qualifying religious exemptions and those whose household income is below the
filing threshold for federal income taxes will not be subject to the penalty. ACA allows the
Secretary of Health and Human Services (HHS) to grant hardship exemptions from the penalty to
anyone determined to have suffered a hardship with respect to the capability to obtain coverage.
The Secretary of HHS has identified a number of different circumstances that would allow
individuals to receive a hardship exemption, including an individual not being eligible for
Medicaid based on a state’s decision not to carry out the ACA expansion and financial or
domestic circumstances that prevent an individual from obtaining coverage (e.g., eviction or
recent experience of domestic violence).
ACA includes several reporting requirements designed, in part, to assist individuals in providing
evidence of having met the mandate. Every person (including employers, insurers, and
government programs) that provides minimum essential coverage to any individual must provide
a return to the IRS that includes information about the individual’s health insurance coverage.
On March 5, 2014, the House of Representatives passed H.R. 4118, Suspending the Individual
Mandate Penalty Law Equals (SIMPLE) Fairness Act. H.R. 4118 provides that individuals do not
have to pay an individual mandate penalty for any month prior to January 1, 2015, effectively
delaying implementation of the individual mandate penalty and maintaining the initial penalty
levels until 2015.

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Individual Mandate Under ACA

Contents
Individual Mandate .......................................................................................................................... 1
Minimum Essential Coverage ................................................................................................... 1
Penalty ....................................................................................................................................... 1
Illustrative Individual Mandate Penalties ............................................................................ 2
Exemptions ................................................................................................................................ 3
Claiming an Exemption ....................................................................................................... 6
Failure to Pay Penalty ................................................................................................................ 8
Potential Financial Assistance ......................................................................................................... 8
Reporting Minimum Essential Coverage ......................................................................................... 8

Tables
Table 1. Individual Mandate Exemptions under ACA ..................................................................... 7
Table A-1. Types of Health Insurance Coverage as they Relate to the Definition of
Minimum Essential Coverage and the Individual Mandate Penalty in 2014 .............................. 10

Appendixes
Appendix A. Health Insurance Coverage and the Individual Mandate .......................................... 10

Contacts
Author Contact Information........................................................................................................... 13
Acknowledgments ......................................................................................................................... 13

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Individual Mandate Under ACA

his report describes the individual mandate as established under the Affordable Care Act
(ACA, P.L. 111-148, as amended).1 The report also discusses the ACA reporting
Trequirements designed, in part, to assist individuals in providing evidence of having met
the mandate.
Individual Mandate
Beginning in 2014, ACA requires most individuals to have health insurance coverage or
potentially pay a penalty for noncompliance.2 Individuals will be required to maintain minimum
essential coverage for themselves and their dependents. Some individuals will be exempt from the
mandate and the penalty, while others may receive financial assistance to help them pay for the
cost of health insurance coverage and the costs associated with using health care services.
Minimum Essential Coverage
In general, individuals who are not exempt from the mandate must maintain minimum essential
coverage to avoid the penalty. Minimum essential coverage is defined broadly in statute and is
further defined in regulations; the definition includes most types of government-sponsored
coverage (e.g., Medicare) as well as most types of private insurance (e.g., employer-sponsored
insurance). Table A-1 in provides detailed information about how different types of health
insurance coverage relate to the definition of minimum essential coverage and the penalty.
Minimum essential coverage does not include health insurance coverage consisting of excepted
benefits, such as dental-only coverage.
Penalty
With some exceptions, individuals will be required to maintain minimum essential coverage for
themselves and their dependents.3 Those who do not meet the mandate may be required to pay a
penalty for each month of noncompliance. The penalty will be calculated as the greater of either:
1. a percentage of the “applicable income,” defined as the amount by which an
individual’s household income exceeds the applicable filing threshold for the
applicable tax year.4 The filing threshold comprises the personal exemption

1 On June 28, 2012, the United States Supreme Court issued its decision in National Federation of Independent
Business v. Sebelius
, finding that the individual mandate in Section 5000A of the Internal Revenue Code (as added by
§1501 of ACA), is a constitutional exercise of Congress’s authority to levy taxes. However, the Court held that it was
not a valid exercise of Congress’s power under the Commerce Clause or the Necessary and Proper Clause. For more
information, see CRS Report WSLG112, Supreme Court Upholds the Individual Mandate as a Permissible Exercise of
Congress’ Taxing Power
, by Erika K. Lunder.
2 §1501(b) as amended by §10106 (b) of P.L. 111-148 and by §1002 of P.L. 111-152 adds Chapter 49, Maintenance of
Essential Coverage, to Subtitle D of the Internal Revenue Code of 1986.
3 In the final rule on maintaining minimum essential coverage (78 FR 53646, August 30, 2013), IRS provides that a
taxpayer is liable for an individual mandate penalty for his/her dependents regardless of whether the taxpayer claims
the dependents for the taxable year. For the purposes of this provision, “dependent” is defined in §152 of the Internal
Revenue Code (IRC) and includes qualifying children and qualifying relatives.
4 Household income is defined as the modified adjusted gross income (MAGI) of the taxpayer, plus the aggregate
MAGI of all other individuals for whom the taxpayer is allowed a deduction for personal exemptions for the taxable
year. Modified adjusted gross income is defined as adjusted gross income increased by foreign earned income (§911 of
(continued...)
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amount (doubled for those married filing jointly) plus the standard deduction
amount,5
• the percentage will be 1.0% in 2014, 2.0% in 2015, and 2.5% thereafter, or
2. a flat dollar amount assessed on each taxpayer and any dependents (e.g., family)
• the annual flat dollar amount phased in—$95 in 2014, $325 in 2015, and
$695 in 2016 and beyond (adjusted for inflation),6 assessed for each taxpayer
and any dependents;
• the amount is reduced by one-half for dependents under the age of 18;
• the total family penalty is capped at 300% of the annual flat dollar amount.
The penalty for noncompliance cannot exceed the national average premium for bronze-level-
qualified health plans offered through exchanges (for the relevant family size).7 Any penalty that
taxpayers are required to pay for themselves or their dependents must be included in their return
for the taxable year. Those individuals who file joint returns are jointly liable for the penalty.
Illustrative Individual Mandate Penalties
The following examples illustrate the penalty for a single individual and for a family of four.
Penalty amounts are shown for 2014, 2015, and 2016. To summarize the penalty (as described
above) for those individuals whose household income is above the filing threshold amount for
federal income tax, the penalty is the greater of a flat dollar amount or a percentage of applicable
income (income above the filing threshold). Individuals below the filing threshold for federal
income tax will not pay a penalty.
In these examples, the 2013 filing threshold was used, which is $10,000 for a single individual
under age 65 with no dependents (single filing status) and $20,000 for a married couple filing
jointly. The filing thresholds are linked to an inflation adjustment based on the CPI-U,8 and
therefore will likely be higher when implemented in 2014 and in subsequent years (thus
exempting people with slightly higher income) than shown here. As a result, the numbers below
are meant for illustrative purposes only. These examples are best used to show the relative scope
of the penalties and the relationship between the various components of the formulas for
calculating the penalty.

(...continued)
the IRC) and any amount of tax-exempt interest received or accrued by the taxpayer during the taxable year.
5 IRS has not released the filing threshold for tax year 2014; the filing threshold for tax year 2013 is the most recent
available. In 2013, the standard deduction was $6,100 and the personal exemption was $3,900, so that generally, the
filing thresholds for individuals under age 65 were $10,000 for a single filing status and $20,000 for a married couple
filing jointly. The filing threshold is linked to an inflation adjustment based on the CPI-U, and therefore it may be
higher in 2014 and subsequent years.
6 The inflation adjustment will be based on the cost-of-living adjustment (CPI-U), for the calendar year, with any
increase that is not a multiple of $50 rounded to the next lowest multiple of $50.
7 As of the date of this report, no information has been released as to the national average premiums of bronze-level
plans offered through exchanges.
8 The Consumer Price Index for all Urban Consumers (CPI-U) is a measure of inflation published by the U.S. Bureau
of Labor Statistics. One way in which it is used is to calculate annual inflation adjustments to personal income tax
brackets.
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Illustrative individual mandate penalties for a single individual with no dependents:
• In 2014, those with income above the filing threshold ($10,000 in 2013) but at or
below $19,500 will pay the $95 flat amount, those with income above $19,500
and below the cap at the national average premium for bronze-level coverage will
pay 1% of applicable income;
• In 2015, those with income above the filing threshold ($10,000 in 2013) but at or
below $26,250 will pay the $325 flat amount, and those with income above
$26,250 and below the cap at the national average premium for bronze-level
coverage will pay 2% of applicable income;
• In 2016, those with income above the filing threshold ($10,000 in 2013) but at or
below $37,800 will pay the $695 flat amount, and those with income above
$37,800 and below the cap at the national average premium for bronze-level
coverage will pay 2.5% of applicable income.
In calculating the penalty for a family, each of the components of the formula increases for a
family, including the filing threshold, flat dollar amount, and the cost of a bronze-level plan.
However, the flat dollar amount for a family cannot be greater than three times the amount for an
individual. For example, in 2014 the flat dollar amount is limited to three times $95, or $285. The
flat dollar amount is one-half for children under 18, so that a married couple with two children
under 18, a single parent with four children under 18, as well as larger families are all subject to
the same flat dollar maximum amount. However, these families may still pay larger penalties, if
they have higher incomes.
Illustrative individual mandate penalties for a family of four (married couple with two children
under age 18):
• In 2014, those with income above the filing threshold ($20,000 in 2013) but at or
below $48,500 will pay the $285 flat dollar amount, those with income above
$48,500 and below the cap at the national average premium for bronze-level
family coverage will pay 1% of applicable income;
• In 2015, those with income above the filing threshold ($20,000 in 2013) but at or
below $68,750 will pay the $975 flat dollar amount, those with income above
$68,750 and below the cap at the national average premium for bronze-level
family coverage will pay 2% of applicable income;
• In 2016, those with income above the filing threshold ($20,000 in 2013) but at or
below $103,400 will pay the $2,085 flat dollar amount, those with income above
$103,400 and below the cap at the national average premium for bronze-level
family coverage will pay 2.5% of applicable income.
Exemptions
Certain individuals (and their dependents) may be exempt from the penalty. These individuals
include those whose household income is less than the filing threshold for federal income taxes
for the applicable tax year (filing threshold exemption), as well as those whose required
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contribution for self-only coverage9 for a calendar year exceeds 8% of household income
(affordability exemption).10 After 2014, this percentage will be adjusted to reflect the excess rate
of premium growth above the rate of income growth for the period.
Certain categories of individuals will be exempt from the individual mandate, including those
with qualifying religious exemptions,11 those in a health care sharing ministry,12 individuals not
lawfully present in the United States, and incarcerated individuals (except those pending the
disposition of charges). No penalty will be imposed on those without coverage for less than three
months13 or members of Indian tribes.14 Qualifying individuals who would otherwise be subject to
the mandate, but who live abroad for at least 330 days within a 12-month period, as well as bona
fide residents of any possession of the United States will be considered to have minimum
essential coverage and therefore not be subject to the penalty. Any individual whom the Secretary
of Health and Human Services (HHS) determines to have suffered a hardship with respect to the
capability to obtain coverage under a qualified health plan will be exempt (see the text box for
more information about the hardship exemption).
The Internal Revenue Service (IRS) issued guidance that provides “transitional relief” from the
penalty for individuals (and any dependents) who were eligible for non-calendar year employer-
sponsored insurance plans in 2013.15 For example, consider an individual who was eligible to
enroll in his/her employer’s health plan, whose plan year began on September 1, 2013, and ends
on August 31, 2014. Under the transitional relief, the individual is not liable for the individual
mandate penalty for January 2014 through August 2014, as the individual would have had to

9 Required contribution is defined as (1) in the case of an individual eligible to purchase minimum essential coverage
through an employer (other than through the exchange), the portion of the annual premium that is paid by the individual
for self-only coverage, or (2) for individuals not included above, the annual premium for the lowest cost bronze plan
available in the individual market through the exchange in the state in which the individual resides, reduced by the
amount of the premium credit for the taxable year.
10 Household income is defined as the modified adjusted gross income (MAGI) of the taxpayer, plus the aggregate
MAGI of all other individuals for whom the taxpayer is allowed a deduction for personal exemptions for the taxable
year. Modified adjusted gross income is defined as adjusted gross income increased by foreign earned income (Section
911 of the IRC) and any amount of tax-exempt interest received or accrued by the taxpayer during the taxable year.
11 In order to qualify for the religious exemption, an individual must be a member of a recognized religious sect or
division (as described in 1402(g)(1) of the Internal Revenue Code of 1986) by reason of which he or she is
conscientiously opposed to acceptance of the benefits of any private or public insurance that makes payments in the
event of death, disability, old-age, or retirement or makes payments toward the cost of, or provides services for,
medical care (including the benefits of any insurance system established by the Social Security Act, such as Social
Security benefits and Medicare). Such sect or division must have been in existence at all times since December 31,
1950. There is no list of specific religious groups that qualify for the exemption. For more information, see CRS Report
RL34708, Religious Exemptions for Mandatory Health Care Programs: A Legal Analysis, by Cynthia Brougher.
12 A health care sharing ministry is defined as an organization described in Section 501(c) of the IRC (including
corporations, and any community chest, fund, or foundation, organized and operated exclusively for religious,
charitable, scientific, or testing for public safety) and is exempt from taxation under Section 501(a). Members of the
ministry share a common set of ethical or religious beliefs and share medical expenses, and retain membership even
after they develop a medical condition. The health sharing ministry must have been in existence (and sharing medical
expenses) at all time since December 31, 1999, and must conduct an annual audit by an independent certified public
accountant, available to the public upon request.
13 This exemption only applies to the first short coverage gap in a calendar year.
14 The term “Indian tribe” means any Indian tribe, band, nation, pueblo, or other organized group or community,
including any Alaska Native village, or regional or village corporation, as defined in, or established pursuant to, the
Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq.), that is recognized as eligible for the special programs
and services provided by the United States to Indians because of their status as Indians.
15 IRS Notice 2013-42.
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enroll in the employer-sponsored plan in 2013 in order to be covered by the plan in those months
of 2014.
Additionally, the IRS has issued guidance that provides that individuals enrolled in certain types
of coverage that are not considered minimum essential coverage will not be liable for a penalty.16
For example, women who only receive pregnancy-related services under Medicaid do not have
minimum essential coverage, but IRS indicates that these women will not be liable for a penalty
in 2014. These “exemptions” from the penalty are not discussed in the “Claiming an Exemption”
section of this report; however, they are identified in Table A-1 in the Appendix of this report.

16 IRS Notice 2014-10.
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Hardship Exemption
Any individual whom the Secretary of HHS determines has suffered a hardship with respect to the capability to obtain
health insurance coverage will receive a hardship exemption. Through regulations and guidance, HHS has identified a
number of circumstances that would al ow individuals to receive a hardship exemption:17
(1) an individual experiences financial, domestic, or other circumstances that prevent him/her from obtaining
coverage or the expense of purchasing coverage would have caused him/her to experience serious deprivation of
food, shelter, clothing, or other necessities;18
(2) an individual is unable to afford coverage based on projected household income;
(3) an individual whose income is below the filing threshold (and therefore eligible for the filing threshold
exemption), except that the individual claimed a dependent with a filing requirement and had household income
exceeding the filing threshold as a result;
(4) an individual is ineligible for Medicaid based on a state’s decision not to carryout the ACA expansion;
(5) an individual is identified eligible for affordable self-only employer-sponsored insurance (ESI), but the aggregate
cost of the ESI for all the employed members of the family exceeds 8% of household income;
(6) an individual is an Indian eligible for services through an Indian health care provider, but is not eligible for an
exemption based on being a member of an Indian tribe, or is eligible for services through the Indian Health
Service;
(7) an individual who enrolls in a plan offered through an exchange prior to the close of the open enrol ment
period (March 31, 2014) will be able to claim a hardship exemption for the months prior to the effective date of
the individual’s coverage;19 or
(8) an individual has been notified that his/her plan will not be renewed and believes that the available plan options
are more expensive than the plan that was not renewed.20
Individuals who claim hardship exemptions are eligible to purchase catastrophic plans. Under ACA, catastrophic plans
must cover a comprehensive set of benefits, but they do not have to comply with the same cost-sharing requirements
with which other plans must comply under ACA. As a result, these plans typical y have lower premiums because they
have higher cost-sharing. Only individuals who are either under age 30 or eligible for a hardship or affordability
exemption from the individual mandate are eligible to enroll in catastrophic plans.21
Claiming an Exemption
Individuals can be exempt from the mandate and the penalty based on an individual’s
characteristics, financial status, or affiliations (e.g., religious affiliations). Some individuals who
are exempt will not be expected to take any actions to claim the exemption; others will have to
either obtain a certification of exemption from a health insurance exchange or claim the
exemption through the tax filing process.

17 45 CFR §155.605(g) and the guidance noted.
18 HHS provides further guidance on these circumstances in “Guidance on Hardship Exemption Criteria and Special
Enrollment Periods” published June 26, 2013, available at http://www.cms.gov/CCIIO/Resources/Regulations-and-
Guidance/Downloads/exemptions-guidance-6-26-2013.pdf.
19 This circumstance is not described in regulations; it is described in “Shared Responsibility Provision Question and
Answer” published October 28, 2013, available at http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/
Downloads/enrollment-period-faq-10-28-2013.pdf.
20 This circumstance is not described in regulations; it is described in “Options Available for Consumers with
Cancelled Policies” published December 19, 2013, available at http://www.cms.gov/CCIIO/Resources/Regulations-
and-Guidance/Downloads/cancellation-consumer-options-12-19-2013.pdf.
21 For more information about catastrophic plans, see CRS Report R43233, Private Health Plans Under the ACA: In
Brief
, by Bernadette Fernandez and Annie L. Mach.
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Individuals who live abroad for more than 330 days in a 12-month period and those who are bona
fide residents of a U.S. possession do not have to take any action to claim the exemption. Those
claiming the short coverage gap, unlawfully present, filing threshold, or affordability exemptions
may only do so on their federal income tax return. In order to claim a religious exemption an
individual must obtain an exemption certification issued by the exchange serving the area in
which the individual resides. Some types of hardship exemptions can be claimed by receiving a
certification from an exchange, while other types can only be claimed through the tax filing
process.22 All other exemptions may be certified by an exchange or may be claimed on the filer’s
federal income tax return.23
Regulations provide that most exemptions be applicable retrospectively (with an exception for a
specific hardship definition) and be recertified annually; only the religious and Indian tribe
exemptions are eligible for prospective or retrospective applicability and continuous certification.
Table 1 outlines the basic features of the nine exemption categories.
Table 1. Individual Mandate Exemptions under ACA
Exemption Eligibility
Certification
Applicability
Recertification
Religious conscience
Exchange only
Prospective or
Continuousa
retrospective
Hardship
Exchange or tax filing
Retrospectiveb Annual
Health care sharing ministry
Exchange or tax filing
Retrospective
Annual
membership
Indian tribe membership
Exchange or tax filing
Prospective or
Continuous
retrospective
Incarceration
Exchange or tax filing
Retrospective
Annual
Affordability
Tax filing only
Retrospective
Annual
Unlawful resident
Tax filing only
Retrospective
Annual
Coverage gap
Tax filing only
Retrospective
Annual
Filing threshold
Not applicablec Retrospective Annual
Sources: 45 CFR Part 155 and 26 CFR Part 1.
Note: The “exemptions” for qualifying individuals who live abroad for at least 330 days within a 12 month
period and bona fide residents of any possession of the United States are not included in this table because
individuals who meet one of these criteria do not need to take any action to comply with the individual mandate.
a. Reapplication for the exemption is required when an individual reaches age 21. See 45 CFR §155.605(c).
b. One type of hardship exemption is available prospectively; it is available to individuals for whom qualifying
coverage is unaffordable based on projected income.
c. Individuals who qualify for a filing threshold exemption are not required to file a tax return or apply to an
exchange to claim the exemption; these individuals are automatically exempt and do not need to take
further action to secure an exemption. However, if the individuals choose to file a return they may claim
the exemption on the return.

22 Several different types of hardship exemptions are described in regulations and guidance (see the text box in this
report); at least three of the types will be provided exclusively through the tax filing process, not through exchanges.
23 According to regulations (45 CFR §155.610(h)), exchanges may only certify exemptions for applications made
within the calendar year for which the exemption is being sought. Individuals seeking to claim exemptions after
December 31st of the relevant year must do so on their federal tax return.
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Failure to Pay Penalty
Taxpayers who are required to pay a penalty but fail to do so will receive a notice from IRS
stating that they owe the penalty. If they still do not pay the penalty, the IRS can attempt to collect
the funds by reducing the amount of their tax refund for that year or future years. However,
individuals who fail to pay the penalty will not be subject to any criminal prosecution or penalty
for such failure. The Secretary of the Treasury cannot file notice of lien or file a levy on any
property for a taxpayer who does not pay the penalty.
Potential Financial Assistance
While ACA requires most individuals to maintain minimum essential coverage, it provides
financial assistance to some individuals to help them meet the requirement. Under the ACA
Medicaid expansion, some states have expanded their Medicaid programs to include all
nonelderly, non-pregnant individuals with income below 133% of the federal poverty level (FPL),
which is expected to significantly increase Medicaid enrollment.24 Beginning in 2014, some
individuals who do not qualify for Medicaid coverage, but who meet other ACA requirements,
will be provided with subsidies to help pay for the premiums and cost-sharing requirements of
health plans offered through an exchange.25
Reporting Minimum Essential Coverage
ACA requires that information be provided to the IRS and to individuals, in part to ensure that
they have both knowledge and proof of meeting the individual mandate. Every person (including
employers, insurers, and government programs) that provides minimum essential coverage to any
individual must provide a return to the IRS (as described below).26 That person must also provide
this information to each primary insured person along with contact information.
The return must include:
• the name, address, and tax identification number of the primary insured and
others covered under the policy;
• the period for which each individual was provided with coverage;
• whether or not the coverage is a qualified health plan offered through an
exchange and, if so, the amount of any advance payment of any cost-sharing
reduction or any premium tax credit;

24 Originally, the assumption was that all states would implement the ACA Medicaid expansion in 2014 as required in
statute because implementing the ACA Medicaid expansion was required in order for states to receive any federal
Medicaid funding. However, on June 28, 2012, the United States Supreme Court issued its decision in National
Federation of Independent Business v. Sebelius
, finding that the federal government cannot terminate the federal
Medicaid funding states are receiving for their current Medicaid program if a state refuses to implement the ACA
Medicaid expansion. This decision effectively made the ACA Medicaid expansion optional for states.
25 For more information on premium credits and cost-sharing subsidies see, CRS Report R41137, Health Insurance
Premium Credits in the Patient Protection and Affordable Care Act (ACA)
, by Bernadette Fernandez.
26 §1502 of P.L. 111-148, which creates §6055 of the Internal Revenue Code of 1986.
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• for coverage provided through the group plan of an employer, the portion of the
premium, if any, paid by the employer; and
• other information required by the Secretary of the Treasury.
Reporting entities were required to begin submitting returns in 2014; however, on July 9, 2013,
the Department of Treasury published a notice that delays this reporting requirement until 2015.27
The notice encourages reporting entities to voluntarily comply with the provision in 2014.



27 IRS Notice 2013-45.
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Appendix A. Health Insurance Coverage and the
Individual Mandate

Table A-1. Types of Health Insurance Coverage as they Relate to the Definition of
Minimum Essential Coverage and the Individual Mandate Penalty in 2014
As Identified in Statute, Regulations, and Guidance
If it is an individual’s only
source of coverage in
2014, is the individual
Is it considered minimum essential
liable for the individual
Type of Coverage
coverage in 2014?
mandate penalty?
Medicare Part A
Yes No
Medicare Advantage
Yes No
Medicaid full benefit
Yes No
coverage
Medicaid limited benefit coverage
Optional coverage of
No No
family planning servicesa
Optional coverage of
No No
tuberculosis-related
servicesb
Coverage of pregnancy-
related servicesc
No No
Coverage limited to
treatment of emergency
No No
medical conditionsd
Coverage authorized
under §1115(a)(2) of the
According to a proposed rule issued by the
Social Security Act (SSA)e
Internal Revenue Service (IRS), this coverage is
No
not considered minimum essential coveragef
Medicaid coverage for the
According to a proposed rule issued by the IRS,
No
medically needyg
this coverage is not considered minimum
essential coveragef
State Children’s Health
Yes No
Insurance Program (CHIP)
TRICARE


Limited benefit TRICARE
According to a proposed rule issued by the IRS,
No
programsh
this coverage is not considered minimum
essential coveragef
Other coverage offered
under TRICARE
Yes No
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If it is an individual’s only
source of coverage in
2014, is the individual
Is it considered minimum essential
liable for the individual
Type of Coverage
coverage in 2014?
mandate penalty?
VA Health Care Programsi
Medical benefits package
authorized for eligible
veterans under 38 U.S.C.
Yes No
1710 and 38 U.S.C. 1705
Civilian Health and
Medical Program of the
Department of Veterans
Yes No
Affairs (CHAMPVA)
authorized under 38
U.S.C. 1781j
Comprehensive health
care program authorized
under 38 U.S.C. 1803 and
38 U.S.C. 1821 for certain
children of Vietnam
Yes No
Veterans and Veterans of
covered service in Korea
who are suffering spina
bifida
Peace Corps Program
Yes No
Nonappropriated Fund
Health Benefits Program of

Yes No
the Department of Defense
Employer-sponsored health
insurance

Yes No
Individual market health
Yes No
insurance
Qualified health plans
(QHP) offered inside and

Yes No
outside exchanges
Grandfathered health
plans
k
Yes No
Self-funded student health
plans
l
Yes No
Refugee Medical Assistance
supported by the
Administration for

Yes No
Children and Families
State high risk poolsm
Yes No
Group health plan provided
through insurance

Yesn No

regulated by a foreign
government

Source: CRS analysis of ACA statute, 26 CFR Part 1, and its implementing regulations and guidance.
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Notes: ACA allows the Secretary of HHS, in coordination with the Secretary of the Treasury, to recognize
arrangements other than those identified in statute as minimum essential coverage. HHS has outlined a
procedure by which a sponsor of coverage or a government agency may apply to HHS to have its coverage
certified as minimum essential coverage. The process is outlined in 45 CFR §156.604 and in guidance issued by
HHS, CCIIO Sub-Regulatory Guidance: Process for Obtaining Recognition as Minimum Essential Coverage, on October
31, 2013.
a. As defined in 42 U.S.C. 1396a(a)(10)(A)(i )(XXI).
b. As defined in 42 U.S.C. 1396a(a)(10)(A)(i )(XII).
c. As defined in 42 U.S.C. 1396a(a)(10)(A)(i)(V) and 1396a(a)(10)(A)(i )(IX).
d. As authorized by 42 U.S.C. 1396b(v).
e. In general, §1115 of the Social Security Act (SSA) gives the Secretary of HHS authority to approve
experimental, pilot, or demonstration projects that promote the objectives of the Medicaid and CHIP
programs. Section 1115(a)(2) of the SSA al ows a state to extend benefits to additional populations
(expansion populations) that would not otherwise be eligible for Medicaid. The coverage a state extends to
expansion populations is not required to be comprehensive and may be limited.
f.
While generally not considered minimum essential coverage, to the extent such coverage is comprehensive
coverage, the Secretaries of HHS and the Treasury may recognize such coverage as minimum essential
coverage. See the proposed rule for more details (78 Federal Register 4302, January 27, 2014).
g. As defined in 42 U.S.C. 1396a(a)(10)(C) and 42 CFR 435.300 and fol owing (Subpart D).
h. Specifically, the program providing care limited to the space available in a facility for the uniformed services
for individuals excluded from TRICARE coverage under sections 1079(a), 1086(c)(1), or 1086(d)(1) of Title
10, U.S.C., and the program for individuals not on active duty for an injury, illness, or disease, incurred or
aggravated in the line of duty under sections 1074a and 1074b of Title 10, U.S.C.
i.
P.L. 111-173 amended ACA to clarify that the Secretary of Veterans Affairs, in coordination with the
Secretary of HHS and the Secretary of the Treasury, would determine which VA health care programs
would be considered minimum essential coverage. The programs outlined in the table are the VA programs
the Secretaries have identified as minimum essential coverage; it would seem that coverage under any VA
programs other than those specified in the table is not considered minimum essential coverage. For more
information on VA health care under ACA, see CRS Report R41198, TRICARE and VA Health Care: Impact of
the Patient Protection and Affordable Care Act (ACA)
, by Sidath Viranga Panangala and Don J. Jansen.
j.
For more information on the Civilian Health and Medical Program of the Department of Veterans Affairs
(CHAMPVA), see CRS Report RS22483, Health Care for Dependents and Survivors of Veterans, by Sidath
Viranga Panangala.
k. Grandfathered plans are defined as those individual and group plans that an individual or family was enrolled
in on the date of enactment (March 23, 2010). For additional information about grandfathered plans, see
CRS Report R41166, Grandfathered Health Plans Under the Patient Protection and Affordable Care Act (ACA), by
Bernadette Fernandez.
l.
Self-funded student health plans are designated minimum essential coverage for plan or policy years
beginning on or before December 31, 2014; for coverage beginning after December 31, 2014, sponsors of
such plans have to apply to the Secretary of HHS to be recognized as minimum essential coverage via the
process outlined in 45 CFR §156.604.
m. State high risk pools are designated as minimum essential coverage for plan or policy years beginning on or
before December 31, 2014; for coverage beginning after December 31, 2014, sponsors of high risk pool
coverage have to apply to the Secretary of HHS to be recognized as minimum essential coverage via the
process outlined in 45 CFR §156.604.
n. According to guidance from HHS, an individual who has coverage under a group health plan provided
through insurance regulated by a foreign government has minimum essential coverage if the individual is
“physically absent from the United States ... ” and if the individual is “physically present in the United States
... while the individual is on expatriate status.” For more information see CCIIO Sub-Regulatory Guidance:
Process for Obtaining Recognition as Minimum Essential Coverage
, issued October 31, 2013.

Congressional Research Service
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Individual Mandate Under ACA

Author Contact Information

Annie L. Mach

Analyst in Health Care Financing
amach@crs.loc.gov, 7-7825

Acknowledgments
Janemarie Mulvey, former CRS Specialist in Health Care Financing, and Manon Scales, former CRS
Research Associate, contributed to previous versions of this report.

Congressional Research Service
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