Final regulations - Shared responsibility payments for individuals under minimum essential coverage rules  

August 27: The Treasury Department and IRS today released for publication in the Federal Register final regulations (T.D. 9632) as guidance for individual taxpayers on their liability under section 5000A for the shared responsibility payment for not maintaining minimum essential coverage.

Under the 2010 health care reform law (known as the Affordable Care Act), individuals are required to maintain minimum essential health insurance coverage.


As explained in the preamble, today’s final regulations [PDF 303 KB] “largely finalize” rules contained in a notice of proposed rulemaking (February 1, 2013). Thus, the final regulations include guidance for maintenance of minimum essential coverage, liability for not maintaining such coverage, and definition of terms (among other items).

As further explained in a related Treasury release, the final regulations clarify rules regarding minimum essential coverage. Also, it is explained that, earlier this summer, the Department of Health and Human Services (HHS) issued final regulations [PDF 327 KB] on exemptions from the provision and on minimum essential coverage. The HHS regulations, together with today’s final regulations, explain the shared responsibility provision and set forth the eligibility rules for receiving an exemption and the process by which individuals can receive certificates of exemption.

The final regulations apply for tax years ending after December 31, 2013.

T.D. 9632 will be published in the Federal Register on Friday, August 30, 2013.

Provisions in final regulations

Under the Affordable Care Act, beginning in 2014, the individual shared responsibility provision requires individuals to have basic health insurance coverage (known as minimum essential coverage) or qualify for an exemption or, alternatively, make a shared responsibility payment when filing a federal income tax return.

Individuals will not have to make a payment if (1) coverage is unaffordable, (2) they spend less than three consecutive months without coverage, or (3) they qualify for an exemption for several other reasons, including hardship and religious beliefs.

Under the final regulations, the shared responsibility provision does not apply for individuals (1) for whom coverage is unaffordable, (2) who have other good cause for going without coverage, or (3) who are without coverage for only a short time. The regulations, thus, clarify the hardship exemption; provide rules for partial-month coverage (so that an individual is treated as having coverage for a month as long as he or she has coverage for any one day of that month); and waive payment requirements for the first part of a coverage gap spanning multiple years.

The final regulations explain that minimum essential coverage includes, at a minimum, all of the following statutory categories:

  • Employer-sponsored coverage (including COBRA coverage and retiree coverage)
  • Coverage purchased in the individual market
  • Medicare Part A coverage
  • Medicaid coverage
  • Children's Health Insurance Program (CHIP) coverage
  • Certain types of veterans health coverage

Minimum essential coverage also includes any additional types of coverage that are designated by HHS or situations when the sponsor of the coverage follows a process outlined in the regulations to be recognized as minimum essential coverage.

Minimum essential coverage, however, does not include certain specialized coverage, such as coverage only for vision care or dental care, workers’ compensation, or coverage only for a specific disease or condition.

©2013 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

The KPMG logo and name are trademarks of KPMG International.

KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever.

The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

Direct comments, including requests for subscriptions, to
For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at:

+ 1 202 533 4366

1801 K Street NW
Washington, DC 20006.

Share this

Share this


Current and future KPMG clients may subscribe to TaxNewsFlash email alerts.

Email your contact information.

TaxNewsFlash-United States by year