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What Is a Shared Responsibility Payment?

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Updated June 10, 2013

Definition:

A shared responsibility payment is a tax penalty created by the Affordable Care Act. There are two types on shared responsibility payments: the employer shared responsibility payment and the individual shared responsibility payment.

The employer shared responsibility payment is a tax penalty imposed on businesses with more than 50 full-time equivalent employees if the businesses don't offer affordable health insurance benefits. If any of the employees get subsidies or tax credits to help them buy health insurance from a health insurance exchange, their employer gets a tax penalty.

The individual shared responsibility payment, created by the ACA’s individual mandate, is a tax penalty imposed on individual US citizens and residents who don’t have health insurance after December 31, 2013.

Background:

ACA proponents hope the threat of the shared responsibility payment will motivate employers to offer health insurance to their employees, and motivate uninsured individuals to get health insurance.

The constitutionality of the individual mandate was challenged by Obamacare opponents arguing that the government doesn’t have the right to penalize its citizens for not buying something. But the mandate was upheld by the Supreme Court on June 28, 2012. The court found that the shared responsibility payment was actually a type of tax, and determined the individual mandate was constitutional because the government has the right to tax its citizens.

Learn More:

If you think you'll owe a shared responsibility payment because you're uninsured, you can find out how much you'll owe in “How Much Is the Health Insurance Penalty for an Individual?” and "How Much Is the Health Insurance Penalty for Families?"

To avoid the shared responsibility payment by getting a health insurance exemption certificate, read "Can You Get a Health Insurance Exemption? How To Avoid the Shared Responsibility Payment."

To avoid the shared responsibility payment by getting health insurance, first read, “Before You Buy Health Insurance: What You Need to Know When Shopping for Health Insurance.”

Small business owners can learn about the small business healthcare tax credit by reading, “Small Business Health Tax Credit--FAQs for Small Business Owners“ and learn strategies for getting an employee health plan in “Health Insurance Options for Your Small Business.

Also Known As: health insurance penalty, health insurance penalty tax, individual mandate penalty, employer mandate penalty, shared responsibility penalty.

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