Rules proposed for individual health care mandate.

• Author: Nevius, Alistair M.

The IRS released proposed rules for the Sec. 5000A shared-responsihility payment--the penalty or tax imposed on individual taxpayers who do not obtain minimum essential health care coverage beginning in 2014 (the controversial "individual mandate") (REG-14850012). The individual mandate was upheld by the Supreme Court last summer as a permissible exercise of Congress's taxing powers under the Constitution (see News Notes, "Supreme Court: Health Care Mandate Is Constitutional as a Tax," 43 The Tax Adviser 493 (August 2012)).

Under Sec. 5000A, starting next year, a taxpayer will be liable for the shared-responsibility payment if the taxpayer or any nonexempt individual whom the taxpayer may claim as a dependent for a tax year does not have minimum essential coverage in a month included in that tax year. Married taxpayers filing a joint return are jointly liable for the payment.

The proposed regulations cover the following topics:

* Maintenance of minimum essential coverage and liability for the shared-responsibility payment. Prop. Regs. Sec. 1.5000A-1 defines minimum essential coverage and liability for the shared-responsibility payment, including for dependents.

* Minimum essential coverage. Prop. Regs. Sec. 1.5000A-2 defines the different types of health plans that qualify as minimum essential coverage.

* Exempt individuals. Prop. Regs. Sec. 1.5000A-3 defines who is exempt from the payment.

* Computation of the shared-responsibility payment. Prop. Regs. Sec. 1.5000A-4 contains rules for computing the amount of the payment.

* Administration and procedure. Prop. Regs. Sec. 1.5000A-5 includes when the payment is due, the prohibition against liens or levies for nonpayment, no criminal fines, and the IRS's authority to offset overpayments of tax to collect the payment.

Minimum essential coverage is defined in the proposed regulations as coverage under a government-sponsored program (Medicare, Medicaid, Tricare, the Children's Health Insurance Program, etc.), an eligible employer-sponsored plan (defined in Prop. Regs. Sec. 1.5000A-2(c)), a plan in the individual market (generally insurance through a health care exchange), a health plan grandfathered under the health care acts (the Patient Protection and Affordable Care Act, P.L. 111-148, and the Health Care and Education Reconciliation Act, P.L. 111-152), or other health benefits coverage that has been recognized as minimum essential coverage by the secretary of Health and Human Services (Prop...