Did you miss the open enrollment deadline for health insurance coverage through the Marketplace? Are you still not covered or was there a lapse in coverage this year or last? It’s going to cost you during tax time.
Under the Affordable Care Act, you are required to have minimum essential coverage or are required to pay a fee called the Individual Shared Responsibility payment (or “individual mandate”) for any month you, your spouse, or your tax dependents don’t have health insurance that qualifies.
What does this have to do with taxes? The fee is to be paid when you file your federal tax return for the year you don’t have coverage. Under the Affordable Care Act, the fee has been increasing each year – this year is no different!
Fees for 2015
For tax year 2015, the ACA penalty is the greater number of these two calculations:
- 2% of your household’s annual taxable income, or
- $325 per adult and $162.50 per child, to a maximum of $975.
Fees for 2016
The fee for 2016 is considerably more expensive than in 2015. If you do not obtain qualifying coverage this year, you will be faced to pay in when you file next tax season. For tax year 2016, the penalty will rise to
- 2.5% of your income, or
- $695 per adult and $347.50 per child, to a maximum of $2,085.
If you qualify for a health coverage exemption, you will not have to pay the fee but you will have to apply for an exemption. Find out more about exemptions here.
If you don’t have health insurance and want to avoid paying the fee when you file next year, you’ll need to find coverage as soon as possible. There’s a chance that you could still gain coverage through the Marketplace, Medicaid, or CHIP. Visit Healthcare.gov to find out. You can obtain insurance on your own through an employer or insurance agent. BeneFinder is a great, free, local company that helps taxpayer navigate the insurance system and stay within budget. Otherwise, Open Enrollment for the Marketplace opens November of each year.
More posts on the Affordable Care Act