One of the most controversial components of the Patient Protection and Affordable Care Act (ACA) has been the tax penalty that the Supreme Court upheld in 2012. Although the details of the law are complex, the basic principle is that if someone does not have insurance, they will have to pay a penalty on their taxes. This is often referred to as the “shared responsibility payment” or the “individual mandate.”
Fundamentally, people are given the choice to either buy insurance or pay a tax. If they choose to buy insurance, it must have what is called “minimum essential coverage.” Any plan purchased through a healthcare exchange will qualify, any Medicare Part A coverage or Medicare Advantage plans will qualify, and any employer-sponsored coverage will also qualify. For a full list of plans that qualify for minimum essential coverage, you can visit healthcare.gov.
What Is The Penalty For Not Having Insurance?
If individuals do not have insurance, the tax penalty they will have to pay will grow over time. For example, if you did not have coverage in 2014, you will have to pay 1% of your yearly household income or $95 per adult and $47.50 per child under the age of 18, whichever one is higher. Next year, if you do not have coverage in 2015, you will need to pay 2% of your yearly household income or $325 per adult and $162.50 for each child under the age of 18. The year after that, it will be 2.5% of yearly household income or $695 per adult. Every year after that, it will increase based on inflation. More information about the tax penalty structure can be found on the website for the IRS – here.
Healthcare Insurance Penalty Exemptions
Some policies do exist that will exempt certain qualifying individuals from paying the tax penalty for being uninsured. Some exemptions include the following:
1. If you’re only uninsured for less than 3 months during the year.
2. If the cheapest coverage available to you would cost more than 8% of your household income.
3. If you don’t have to file a tax return because your income is too low.
A full list of insurance tax penalty exemptions can be found on the HealthCare.gov website – here.
Is It Too Late To Get Health Insurance?
It’s too late to avoid having to pay a tax penalty for 2014 if you don’t have insurance coverage, but you have plenty of time to sign up for a new insurance plan during open enrollment from November 15, 2014 to February 15, 2015. As you browse through insurance options or update your insurance information, make sure the plan you are purchasing covers services from a doctor group you can trust, like Meritage Medical Network.
Meritage Medical Network is a healthcare network representing local physician members and providing health care and benefits for HMO members in Marin, Napa, and Sonoma Counties in California. The expert medical and administrative staff at Meritage are dedicated to ensuring that you receive the best health care available. We’re happy to provide you with useful information regarding open enrollment, and we hope you’ll visit our homepage to see why so many people choose Meritage Medical Network for all their health care needs.