You may be subject to a tax penalty if you are uninsured in 2014. Read for complete details on how tax penalty works for the uninsured.
You may have heard that there’s a tax penalty if you go uninsured starting in 2014. But there’s a lot of misinformation floating around about who will have to pay and how much the penalty is. So here’s the complete details…
This table breaks down how the penalty would be applied each year:
|Minimum Penalty||Maximum Penalty|
|Family of One Income||$15,521||$46,681+|
|2014 Yearly Penalty||Minimum:$95 per adult$47.50 per child.||Maximum: 1.0% of income up to $2,448 per adult1|
|2015 Yearly Penalty||Minimum:$325 per adult$162.50 per child||Maximum: 2.0% of income up to $3,8162 per adult1|
|2016 Yearly Penalty||Minimum:$695 per adult$347.50 per child||Maximum: 2.5% of income up to $2,6762 per adult1|
1 (As published by the IRS: http://www.irs.gov/uac/ACA-Individual-Shared-Responsibility-Provision-Calculating-the-Payment)2 (As projected by the Tax Policy Center: http://taxpolicycenter.org/taxfacts/acacalculator.cfm)
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 tax penalties go into effect in 2014, and if you’re uninsured for more than three consecutive months in 2014, you may incur a penalty that would be applied when you file your 2014 income tax return.
The tax penalty is phased-in over a three year period.
- In 2014, the penalty will be the greater of 1.0% of your 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 your 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 your taxable income or $695 per adult and $347.50 per child (up to $2,085 per family).
After 2016, the penalty will be rise annually and be tied to the increase in the cost of living.Households with incomes below 400% of the Federal Poverty Level 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.
You can apply for exemptions to the tax penalty if they fall into one of these categories:
- Financial hardship
- Religious objection
- American Indian
- Uninsured for less than three consecutive months
- Undocumented immigrant
Visit eHealth today to compare plans and get affordable coverage today to avoid tax penalty.