Most People must get health insurance under the Affordable Care Act, or ACA, but not everyone did so and not everyone who did enroll maintained their coverage. Millions may be subject to an Obamacare penalty, which is a tax fine for not having health insurance.
Who is penalized for not having health insurance?
You may be subject to a tax penalty for the entire year if you go more than three complete, consecutive months without having health insurance. Even if you only have health insurance for one day per month, it still counts as an entire month.
Here’s an illustration: Imagine you go the entire months of January and February without health insurance.
After that, you purchase health insurance, which takes effect on March 31. Because you did not go without a health plan for three complete, consecutive months, you would not be subject to a tax penalty for not having health insurance.
penalty for not having health insurance
A flat rate or a percentage of your household’s total adjusted gross income, whichever is higher, is used to determine the penalty.
2.5% of your household’s total adjusted gross income, or $695 for adults and $347.50 for children, up to a maximum of $2,085, is the penalty amount for tax year 2017.
The penalty amounts for tax years 2018 and later have not yet been disclosed, but an increase is anticipated.
A tax preparer, if you have one, or tax software can calculate any penalty for not having health insurance. Note that for the 2017 tax year, the IRS won’t automatically reject tax returns that don’t disclose whether you have health insurance. But taxpayers who don’t answer the health insurance question may be contacted for follow-up, according to the IRS.
