By Ferdous Al-Faruque - 07/24/14 07:18 PM EDT
The IRS said Thursday that the maximum penalty individuals could face for failing to obtain health insurance this year will be $2,448, while families with five or more members could face fines up to $12,240.
The maximum penalty would only hit individuals without insurance whose income is above $244,800. For families of five or more, the maximum penalty would affect people making a combined yearly income of $1.2 million.
“Only a small number of the highest earners would pay this maximum fee.“
Under the Affordable Care Act’s individual mandate, people are either required to obtain health insurance or risk a tax penalty from the IRS.
People who don’t buy health insurance plans that meet the ACA’s minimum standards are fined 1 percent of their annual household income if they make more than $19,650. However if they make less, they are fined a flat rate of $95 annually or are not fined if they make less than $10,150.
The IRS released documents Thursday using the Bronze level plans to calculate how much individuals should be fined. Insurance plans under the Bronze level meet the minimum requirements to comply with ObamaCare
While they have the lowest premium rates, they also have the highest out-of-pocket costs on the healthcare exchanges.
Under Bronze level plans, insurance companies are required to cover 60 percent of an individuals healthcare costs while the individual covers the remaining 40 percent.
The IRS calculates the national monthly average premium for Bronze level plans available through the healthcare exchanges this year is $204 per person. Therefore, people who did not buy health insurance could be fined up to that amount for every month they lacked insurance, which comes to $2,448 dollars over the course of one year.
A similar calculation by the agency determined the national monthly average premium for such plans is $1,020 for families of five or more people.
— This story was updated on July 25.