TIR 07-18: Individual Mandate Penalties for Tax Year 2008

Pursuant to G.L.=20 c. 111M, =C2=A7 2, the Department of Revenue is issuing this Technical = Information=20 Release to announce the penalty schedule for individuals who fail to = comply in=20 2008 with the requirements under the Massachusetts Health Care Reform = Act (the=20 Act). See St.2006, c. 58, as amended. The Act requires = most=20 adults 18 and over with access to affordable health insurance to obtain=20 it. In 2008, individuals who are deemed able to afford health = insurance=20 but fail to comply are subject to penalties for each month that they are = uninsured in the tax year.[1] The penalties, which will be imposed = through the=20 individual=E2=80=99s personal income tax return, shall not exceed 50% of = the minimum=20 monthly insurance premium for which an individual would have qualified = through=20 the Commonwealth Health Insurance Connector Authority (the = Connector).

These penalties apply only to adults who are deemed able to = afford=20 health insurance. On an annual basis, the Connector establishes = separate=20 standards that determine whether individuals, married couples and = families can=20 afford health insurance, based on their incomes and affordable health = insurance=20 premiums. Those who are not deemed able to afford health insurance = pursuant to these standards will not be penalized. Individuals also have = the=20 opportunity to file appeals with the Connector asserting that hardship = prevented=20 them from purchasing health insurance (and thus that they should not be = subject=20 to tax penalties).[2]

For 2008:

Individuals with incomes up to 150% of the Federal Poverty Level = are not=20 subject to any penalty for failure to purchase health insurance, as = those at=20 this income level are not required to pay an enrollee premium for = Commonwealth=20 Care health insurance.
Penalties for individuals with incomes from 150.1 to 300% of the = Federal=20 Poverty Level will be half of the lowest priced Commonwealth Care = enrollee=20 premium that could be charged to an individual at the corresponding = income=20 level.
Penalties for individuals with incomes more than 300% of the = Federal=20 Poverty Level will be:=20
- Half of the lowest priced Commonwealth Choice Young Adult Plan = premium=20 (without prescription drug coverage) for individuals up to age 26.=20
- Half the lowest priced Commonwealth Choice Bronze premium = (without=20 prescription drug coverage) for those 27 and = above.
Penalty rates for tax year 2008 are based on the Commonwealth = Health=20 Insurance Connector=E2=80=99s plan prices as of January 2008. The = Department=20 anticipates issuing an updated penalty schedule for tax year = 2009.
Penalties for married couples without health insurance (with or = without=20 children) will equal the sum of individual penalties for each=20 spouse.

Penalties for 2008
Individual Income Category*	150.1-200% FPL	200.1-250% FPL	250.1-300% FPL	Above 300% FPL Age 18-26	Above 300% FPL Age 27+
Penalty	$17.50/month $210/year	$35/month $420/year	$52.50/month $630/year	$56/month $672/year	$76/month $912/year

* Compare individual=E2=80=99s annual family household income to = chart immediately=20 below to determine applicable Federal Poverty Level = (FPL).

Federal=20 Poverty Level =E2=80=93 Annual Income Standards

Family Size	150% FPL	200% FPL	250% FPL	300% FPL
1	$15,612	$20,808	$26,016	$31,212
2	$21,012	$28,008	$35,016	$42,012
3	$26,412	$35,208	$44,016	$52,812
4	$31,812	$42,408	$53,016	$63,612
5	$37,212	$49,608	$62,016	$74,412
6	$42,612	$56,808	$71,016	$85,212
7	$48,012	$64,008	$80,016	$96,012
8	$53,412	$71,208	$89,016	$106,812
For each additional person add	+$5,400	+$7,200	+$9,000	+10,800

This Schedule reflects the Federal Poverty Level standards for=20 2008.

/s/Navjeet K. Bal
Navjeet K. = Bal
Commissioner of=20 Revenue

NKB:MTF:adh

April 7, 2008

TIR 07-18

[1] A resident who has access to affordable health = insurance but=20 who does not obtain the coverage, and to whom an exception does not = apply, is=20 subject to penalties under G.L. c. 111M, =C2=A7 2. The penalty will be = assessed for=20 each of the months the individual did not meet the requirements of the = health=20 care mandate, provided, that there is no penalty in the case of a lapse = in=20 coverage of 63 days or less. For more information regarding the health = care=20 individual mandate, including exceptions from the mandate and appeal = rights of=20 taxpayers in connection with the penalty under G.L. c. 111M, =C2=A7 2, = see the=20 Department of Revenue regulation 830 CMR 111M.2.1: Health = Insurance=20 Individual Mandate; Personal Income Tax Return Requirements.

[2]See the Connector=E2=80=99s regulation, 956 = CMR 6.00,=20 Determining Affordability for the Individual Mandate. The Affordability = and=20 Premium Schedules contained in the Massachusetts personal income tax = forms are=20 adopted by the Board of the Connector pursuant to 956 CMR = 6.05.

=C2=A9 2008 Commonwealth of Massachusetts=20
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