health care reform

Penalty for Not Having Health Insurance

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The penalty will be calculated on the individual’s 2014 Federal income tax return. The penalty is calculated for each month that they do not have health insurance coverage.

A penalty will not be imposed on:

  • Individuals without health insurance for less than three months during the year
  • Members of Native American tribes

The penalty is calculated as the greater of:

  • A percentage of the individual’s income that exceeds their filing threshold for each year;
    • The percentage will be 1% for 2014, 2% for 2015 and 2.5% for 2016 and later.
    • Filing threshold is defined as the personal exemption amount plus the standard deduction amount for the individual’s filing status.

       Or,

  • A flat dollar amount is assessed separately for the taxpayer, spouse, and dependents.
    • The flat dollar amount will be $95 for 2014, $325 for 2015 and $695 for 2016 and beyond.
    • The amount is 50% for each dependent under age 18.
    • The total family flat dollar amount is capped at 300% of the annual flat dollar amount.

The penalty amount cannot exceed the national average premium for bronze-level health plans (for the relevant family size) offered at the State Exchange for which the taxpayer resides.

Individuals who are Exempt from the Requirement to have Health Insurance

The following individuals are not required to have health insurance:

  • Individuals with a qualifying religious exemption
  • Individuals who are in a health care sharing ministry
  • Individuals not lawfully present in the United States
  • Individuals who are in prison

Training Video

TY 2013 Federal Tax Law Updates

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