With the institution of the Affordable Healthcare Act, there are also some new rules to avoid Health Insurance Penalties. If you are uninsured, you can expect to pay a hefty penalty on your tax returns unless you meet the strict exemption requirements. Here are some things to know about the penalty- and how much you may end up paying if you are uninsured. While it may not seem like a big deal to go without insurance, the penalties may make you rethink that.
The Health Insurance Penalties Have Been Phased-in Over the Last 6 Years
2014 was the first year that uninsured people faced a penalty. The amount that an individual or family was penalized was based on 1% of their taxable income. Income levels that were taxed went as low as $15,521 to $46,681 and higher. Penalties went up to nearly $300 per family. Broken down, these costs translate to $95 per adult and $47.50 per child.
During 2017, this penalty increased from 1% of the income to 2%- a cost of up to $675 per family. This translates to about $325 for every adult and $347.50 per child. In 2018, they raised the penalty by another half percent of your taxable income. A family could be charged up to $2,085-$3,085 in penalty costs for being uninsured. Or a penalty price of $695 per adult and $347.50 per child. Fortunately, however, the penalty will no longer increase, though it will adjust with inflation. This penalty ended in 2019.
Only Certain Situations Can Make You Exempt
To be exempt from these penalties, you must meet several possible requirements. Financial hardship is one of the biggest, mainly if even the most affordable health insurance cost is more than 8% of your household income. Another economic reason for being exempt will be if your income level does not require you to file an income tax return.
There are also several other possible exemptions, including religious beliefs, incarceration status, you are a Native American or eligible for health insurance under an Indian Health Service provider, or you are currently facing particular hardship. Other people who do not have to worry about paying the penalty are those who only went three months being uninsured during the year or people out of the country for a year or longer. For a more comprehensive look at who is exempt, look online at the Affordable Healthcare Act website, which details it all.
The easiest way to avoid paying these penalties is to ensure you are insured or file for any exemptions you may potentially qualify for. These penalties are in place to encourage people to get insured under the Affordable Health Care Act. For the amount you may pay in penalties, you are far better off just investing in a health insurance plan instead. If you would rather avoid such high penalty costs, keep these numbers in mind, and start looking for insurance to prepare for 2020. Open Enrollment season has begun again, giving you plenty of time to find the perfect coverage plan for you and your family.
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