Filing taxes for 2014 and beyond will come with potential new fines for millions of Americans. In accordance with the Affordable Care Act, more commonly referred to as “Obamacare,” Americans who do not carry health insurance will be subject to a penalty fine/tax.
So how can you figure out if you are subject to this new fine and how it will impact your tax return for 2014 and coming years?
Here we answer a few of the common questions related to the new tax:
What if I Can’t Afford Insurance?
The insurance quotes that individuals receive when they visit Healthcare.gov are income based, meaning that the insurance should be affordable for most people. If you feel like you cannot afford the amount that is quoted, however, you may quality for about 30 different exemptions. Some of these exemptions include members of certain religious groups, Indian tribal members, individuals who have suffered a hardship and had less than 3 months of coverage gap, some low-income individuals who truly cannot afford coverage, people who live in states that opted out of the Medicaid expansion, people who received no plan options in their state’s insurance exchange, and others.
Simply saying that you cannot afford the insurance is not enough, though. You have to have a specific reason that falls into the government-appointed categories for exemption.
Based on a forecast by H&R Block, 4 million people will be subject to the uninsured penalty this year, and 26 million will be allowed a tax penalty exemption. To know if you qualify for any of these exemptions, talk with a tax professional who is well-versed on the Affordable Care Act changes.
What is the Tax Penalty if I Am Uninsured?
For taxes filed from the year 2014, the fee for being uninsured is either $95 per person per household, or 1 percent of the household income that is above the threshold for filing the taxes—whichever is higher.
Consider those fees a slap on the wrist of sorts; for 2015 that number jumps to $325 per person or 2 percent of income. Government estimates put the fee per uninsured person at as much as $1,100 by 2016. To know exactly what you may owe, you can type in your financial information using the Tax Policy Center’s ACA calculator.
Can I Still Get Insurance for 2015?
The official dates for applying for health care coverage on Healthcare.gov have ended for 2015, but there are still some instances when you may be eligible to apply anyway. If you have a “special enrollment situation” you can apply any time of year. You must apply within 30 to 60 days, though, depending on the special enrollment circumstances. Those enrollment situations include:
- Losing coverage somewhere else. An example would be if you lost your job or a spouse lost his or her job that contained your coverage.
- Change in marital status. If you get married or divorced, you can apply for ACA coverage.
- Change in dependents. A birth or adoption will allow the entire family the chance to apply for the coverage even though the deadline has passed.
- A permanent move to a new area with different health plan choices.
In some cases if you apply for Medicaid and are denied, you are also able to then go ahead and apply on the healthcare exchange, even if enrollment dates are closed. There may be other instances that allow you to enroll in insurance outside the designated dates and you can talk to a benefits representative to find out what exactly those are. You can read more about fees, exemptions, and the Affordable Care Act plan by visiting Healthcare.gov.