What is the tax fee penalty if I don’t have minimum essential health insurance by January 1, 2014?
If you would like to subscribe to our email list, please enter your email address below and click "Subscribe".
If you don’t have minimum essential health insurance coverage the IRS will collect a tax penalty from you.
The penalty is slated to be 1/12th of the greater of:
- 2014- $95 per uninsured adult in the household or one percent of the household income over the filing threshold
(whichever is greater) and capped at $285 per household
- 2015- $325 per uninsured adult in the household or two percent of the household income over the filing threshold
(whichever is greater) and capped at $975 per household
- 2016- $695 per uninsured adult in the household or 2.5 percent of the household income over the filing threshold
(whichever is greater) and capped at $2,085 per household
The penalty will be half of the amount for people under 18 and the penalty is calculated for each month you or your dependent(s) do not have coverage.
Q.What are the exclusions to the penalty?
A.There are exclusions to the penalty that include:
- Religious reasons
- Not present in the United States
- In prison
- Not able to pay for coverage that is more than eight percent of the household income
- An income that is below 100 percent of the poverty Level
- Having a hardship waiver
- Not covered for less than three months during the year
- Member of a qualified Native American Indian Tribe
Q.What if someone doesn't have health coverage in 2014?
A. If you don't have health coverage in 2014 you may have to pay a penalty and you must pay for all of your health care. The health care law requires all people that can afford to pay for their health coverage to take responsibility for their own health insurance or pay a penalty. Even if you pay the health care penalty, you won't get health insurance and you will be responsible for 100% of the cost of your medical care. Open enrollment ends on March 31, 2014. After March 31, 2014 you can get new private health insurance for 2014 only through a special enrollment period if you have a qualifying life event.
To avoid the penalty, you need insurance that qualifies as minimum essential coverage. If you are covered by any of the following below you are considered covered and won't have to pay a penalty:
- Any Marketplace plan, or any individual insurance plan you already have
- Any Employer plan (including COBRA, with or without grandfathered status. This includes retiree plans
- The Children's Health Insurance Program (CHIP)
- TRICARE (for veterans and veteran families)
- Veterans health care programs
- Peace Corps Volunteer plans
Q.Who doesn't have to pay the health care coverage penalty?
A.Uninsured people won't have to pay a penalty it they-
- are uninsured for less than 3 months of the year
- are determined to have very low income and coverage is considered unaffordable
- are not required to file a tax return because their income is too low
- would qualify under the new income limits for Medicaid, but their state has chosen not to expand Medicaid eligibility
- are a member of a federally recognized Indian tribe
- participate in a health care sharing ministry
- are a member of a recognized religious sect with religious objections to health insurance
If you don’t qualify for these situations, you can apply for an exemption asking not to pay the penalty.