Affordable Care Act (ACA) tax provisions for 2016

The Indivdual Shared Responsibility Payment (ISRP).

Otherwise known as the Individual Mandate, this is a fancy and deliberately misleading name for what is essentially a penalty tax (according to the Chief Justice of the US Supreme Court). The law states that anyone who does not have a health insurance policy that meets the Minimum Essential Requirements (MEC) of the ACA for at least 9 full months plus a day must pay a penalty unless they meet one of the numerous exemptions.

For 2016, the penalty has increased from $325 to $695 per taxpayer (and spouse) and from $167.50 to $347.50 for each dependent OR 2.5% of the taxpayer's Household Income in excess of the filing threshold, whichever is HIGHER. As of now,the penalty remains the same in 2017.

Find more information on the penalty tax

Find more information on available exemptions from the tax


The Premium Tax Credit (PTC).

The ACA created a marketplace exchange on the internet where individuals that are not offered health insurance by an employer can go to compare and purchase insurance. Many states, including Vermont set up their own exchange. See Useful Links to the left to go to the federal or VT site.

Many taxpayers are eligible for subsidies from the federal and some state governments (including Vermont) to help pay for health insurance. These subsidies can be applied for when signing up for insurance in the form of an Advance Premium Tax Credit (APTC) or a taxpayer can pay the full amount of insurance premiums during the year and, if eligible, claim a Premium Tax Credit (PTC) on the year-end tax return.

Warning: The calculation of advance subsidies is potentially inaccurate because they are based on an estimate of future income. If a taxpayer experienced a change in income or circumstances during the year (marriage, new job, new child, etc.) and did not report it to the health care exchange in order to have their subsidy adjusted, then the taxpayer may owe some or all of the advance credit back to the IRS when their year-end tax return is filed. It is also possible that the taxpayer received less subsidies than they were entitled to. The additional subsidy can be claimed on the tax return as a PTC.

Find more information on the tax credits.

These provisions are the major ones that affect individual taxpayers. There are other provisions that affect businesses.

Find more information on how the ACA affects employers.



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