Tax penalties for failing to purchase health insurance go into effect this year.
If, by April 1, you are without coverage and don’t meet the law’s exemption status, you face a fine based on your household income.
Here’s how the penalties (officially called “individual shared responsibility payments”) break down.
Exemptions may apply
If the lowest priced plan available to you on the marketplace (Washington Healthplanfinder) would cost more than eight percent of your household income, you are exempt from purchasing health insurance.
If you are facing a major financial hardship such as bankruptcy or eviction, you might avoid the penalty, too. Other exemptions, such as religious objections, apply.
Most penalties will cost more than $95
The most commonly cited figure, a $95 penalty, is a minimum. It applies specifically to unmarried individuals with no dependents making less than $19,650. Higher income-earning individuals will face higher penalties. Forbes gives the example of a single person making $30,000 a year, who would pay a tax penalty of $200, in addition to the cost of all of her own health expenses.
Incremental penalty roll-out
In 2014, penalties are whichever is bigger: either one percent of your “adjusted gross income” (your take-home pay after deductions, personal allowances and exemptions) or $95 per adult and $47.50 per child, up to $285 per family.
What can you expect in the years to come?
- In 2015 the penalties rise to a minimum of $325 per adult and $162.50 per child, up to $975 per family — or two percent of your AGI.
- In 2016 the minimum is $695 per adult and $347.50 per child, up to $2,085 per family — or 2.5 percent of your AGI.
- For 2017 and beyond … the minimum penalties adjust for inflation.
How to avoid fines by the deadline
To avoid a fine, be sure to enroll and pay for your plan at Washington Healthplanfinder before 11:59 pm on March 31, the official deadline.