If you paid a penalty for no insurance coverage in 2014
It’s possible that you may have just paid or will pay an Obamacare Individual Mandate penalty on your 2014 tax return. This payment is usually the greater of:
- 1% of your household income that is above your filing threshold or
- $95 per person (with a max of $285 using this method).
Now what about 2015? You can expect to pay more for 2015 if you don’t have the necessary coverage. For 2015 you can expect your penalty to be the greater of:
- 2.0% of your household income that is above your filing threshold or,
- $325 per person ($162.50 per child under 18).
For 2016 the penalty is:
- 2.5% of your household income that is above your filing threshold or,
- $695 per person ($347.50 per child under 18).
As you can see, the penalty for not entering into government-mandated commerce is going up. It may be time to take a look at the cost of coverage through the exchanges and compare it to your expected penalty. If you use the Federal Exchange to purchase insurance, we recommend a credit freeze first.
However, there are a number of ways that may qualify you for an exemption from getting the required coverage.
Here’s a handy chart that gives you the type of penalty exemption and then our expert commentary on what it means.
First we cover the broad category, then the general meaning, and finally what it really means for you.
This list is not comprehensive. Contact us if you need a detailed listing.
| Type of Exemption | What is says | What it really means |
| Incarceration | You are in a jail, prison, or similar penal institution or correctional facility after the disposition of legal charges. | No tax penalty plus you’re getting free medical care,food, and lodging thanks to those that pay taxes. |
| Not lawfully present | You are not a U.S. citizen or an alien lawfully present in the U.S. | Pretty much eliminates your tax worries although you may still be able to vote in some areas. |
| Income below the filing requirement | Your income is below the minimum threshold for filing a tax return. | No tax penalty plus you may already have state-sponsored coverage. |
| Health care sharing ministry | You are a member of a recognized health care sharing ministry. | Technically not insurance but a substitute such as the Samaritans program |
| Short coverage gap | You went without coverage for less than three consecutive months during the year. | Self-explanatory however, if you have more than one short coverage gap, you only get one exemption |
| Hardship | You’ve suffered a hardship that makes getting coverage impossible. | This is a broad list. Examples can be found here. |
| Affordability | You can’t afford coverage because the minimum amount you must pay for the premiums is more than eight percent of your household income. | Not as simple a calculation as it sounds. This is based on a bronze-level plan, and household income may be different from the income on your return. |