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Tax Penalties

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If you don’t have major medical health insurance that meets minimum Federal standards for more than three months in a row, you may incur a tax penalty. You’d pay that penalty when you file your income taxes.

Plans That Help You Avoid The Tax Penalty

Any plan that qualifies as “minimum essential coverage” counts as coverage under the health care law. All of the major medical plans and qualified health plans available through Members Insurance Marketplace meet the qualifications for “minimum essential coverage”, meaning you won’t face the tax penalty if you purchase one of those plans.

Calculating Your Tax Penalty

If you can afford health insurance but choose not to buy it, you must have a health coverage exemption or pay a fee. (The fee is sometimes called the "penalty," "fine," " available through payment," or "individual mandate.")

2017

If you don’t have coverage in 2017, you’ll pay the higher of these two amounts:

  • 2.5% of your yearly, taxable household income. The maximum penalty is the national average premium for a Bronze plan.
  • $695 per person ($347.50 per child under 18).

2016

If you don’t have coverage in 2016, you’ll pay the higher of these two amounts:

  • 2.5% of your yearly, taxable household income. The maximum penalty is the national average premium for a Bronze plan.
  • $695 per person ($347.50 per child under 18).


How You Pay The Fee

You’ll pay the fee on the federal income tax return you file for the year you don’t have coverage. Most people will file their 2016 returns in early 2017.

Learn more about the individual shared responsibility payment from the Internal Revenue Service.


FAQs

What if I’m uncovered for just part of the year?

If you’re uninsured for just part of the year, 1/12 of the yearly penalty applies to each month you’re uninsured. If you’re uninsured for no more than 2 months of the year, you don’t have to make a payment.

How is the penalty collected?

You’ll pay the penalty when you file the federal income tax return for the year for which you’re seeking coverage. Most people will file their 2016 tax returns early in 2017.

What happens if I don't pay the fee?

The IRS will hold back the amount of the fee from any future tax refunds. There are no liens, levies, or criminal penalties for failing to pay the fee. 

 

Source: https://www.healthcare.gov/fees-exemptions/fee-for-not-being-covered/
Source: https://www.ehealthinsurance.com/resource-center/wp-content/uploads/3-steps-obamacare-ehealth-2016.pdf

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