The Affordable Care Act has removed obstacles that previously prevented some people from buying health insurance, but not everyone has signed up, and not everyone who did sign up has continued to keep their coverage. Because of this,
Who Will Pay the Penalty?
The ACA’s individual mandate requires that everyone in the U.S. have health insurance, unless they qualify for an exemption. If you didn’t qualify, and instead went without essential health benefits for more than three months in the calendar year of 2015, you will have to pay a penalty on your upcoming tax return.
How Much Does the Penalty Cost?
The cost can be calculated in one of two ways: You will either pay a percentage of your household’s taxable income, which you’ll figure out on your annual tax return, or a flat rate, whichever of the two is greater. Your tax return will also help to determine your penalty amount.
Every year, the penalty will increase to keep pace with inflation and to encourage more people to buy health insurance coverage.
For the 2015 tax year, the ACA penalty is 2% of your household’s annual taxable income, or $325 per adult and $162.50 per child, up to a maximum of $975.
For the 2016 tax year, the penalty is expected to rise to 2.5% of your income, or $695 per adult and $347.50 per child, up to a maximum of $2,085.
For tax year 2017 and beyond, the percentage option is expected to remain at 2.5%, but the flat fee is anticipated to be adjusted for inflation.
How to Avoid the Obamacare Penalty
The easiest way to avoid the Obamacare penalty is by having health insurance. The ACA set up the health insurance marketplace to help make this possible. You can search for plans and prices on the marketplace, or be directed to your state’s specific marketplace that provides the service for your state.
Contact the dedicated agents at LEB Insurance Group to get started!