Health Care FAQ
, FAQ's on Obamacare/ACATurboTax Employee
For tax year 2014, the tax penalty for not having health insurance is the larger of 1% of your 2014 income or $95 per uninsured adult (plus $47.50 for each uninsured child), with a maximum penalty of $285 per family.
In tax years 2015 and 2016, the penalty increases substantially. For example, in 2016 the penalty will increase to 2.5% of your income or $695 per uninsured person, whichever is higher.
In addition to the penalty, those without health insurance will be responsible for 100% of their medical bills, which can burden them with costs that far exceed any penalties for not having coverage.
Health Care Pro
The tax penalties go into effect in 2014, which means, if you’re uninsured for more than three months in 2014, you may incur the tax penalty and that penalty would be applied when you file your 2014 income tax return.
If you don’t qualify for an exemption to the Affordable Care Act’s mandate to purchase qualifying health coverage, then you will be subject to a tax penalty.
The penalty is phased-in over a three year period.
- In 2014, the penalty will be the greater of 1.0% of taxable income or $95 per adult and $47.50 per child (up to $285 per family).
- In 2015, the penalty will be the greater of 2.0% of taxable income or $325 per adult and $162.50 per child (up to $975 per family).
- In 2016, the penalty will be at the greater of 2.5% of taxable income or $695 per adult and $347.50 per child (up to $$2,085 per family).
- After 2016, the penalty will be increased annually by the increase to the cost-of-living.
Households with incomes above 400% of FPL will be exempt from paying tax penalties if insurance in their area costs more than 8% of their taxable income, after taking into account employer contributions or tax credits.
People will be able to apply for exemptions to the tax penalty if
- They have financial hardships,
- Religious objections,
- If they’re an American Indian,
- If they’re uninsured for less than three months,
- If they’re an undocumented immigrant,
- If they’re incarcerated,