CMS and IRS Publish Proposed Rules on Exemption to Individual Mandate Financial Penalty


CMS and the Internal Revenue Service (IRS) issued two proposed rules on January 30, 2013 setting forth the exemptions an individual may satisfy to avoid financial penalties associated with the Patient Protection and Affordable Care Act’s (PPACA) “individual mandate.”  PPACA requires individuals to possess health insurance that meets certain minimum coverage benchmarks, or else pay a financial penalty for forgoing coverage. The proposed regulations establish the criteria that would spare an individual from having to pay the penalty if he/she did not acquire minimum coverage.  As a result of these hardship exemptions, the Congressional Budget Office estimates that only two percent of Americans will actually pay the penalty.

Individuals will not be forced to pay the penalty if the health insurance exchange in that individual’s state determines that coverage available on the exchange would be unaffordable for the individual.  Moreover, individuals who would be eligible for Medicaid but for their State’s decision to refuse Federal funding to expand Medicaid eligibility also would be exempt from the penalty.  Individuals who are not otherwise required to file Federal income tax returns also would be exempt.  (Beginning in 2015, individuals who are required to file Federal income tax returns will indicate their hardship exemption on their 2014 returns.)

The CMS proposed rule is available here, and the IRS rule is available here.  Comments on the CMS proposal are due March 18, 2013, and comments to IRS are due March 2.

Reporter, Christopher Kenny, Washington, D.C., + 1 202 626 9253,

Written by:

Published In:


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© King & Spalding | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.