No 2019 And 2020 Tax Penalty For Not Having Health Insurance Under Obamacare
Will i still have to pay health insurance penalties ? This is the question a lot of Americans are asking. The short answer is NO from 2019. Here is why the individual mandate, a.k.a Obamacare penalty, is no longer in effect from 2019:
While Congressional Republicans were unable to muster the required majorities to pass several versions of House and Senate health care replacement bills, they were able to include a provision to repeal the individual mandate via successfully passing their GOP tax reform bill to support President Trumps tax reform agenda.
While the Obamacare penalty applied for 2017 and 2018 tax filings , for 2019 the Affordable Care Act individual mandate provision requiring every eligible American to obtain health insurance or pay financial penalty when filing taxes has been permanently scrapped.
The individual mandate repeal does not mean that Obamacare or the broader ACA is dead health insurance marketplaces and provisions like coverage for children under 26 are still in place. But it does deal a massive blow to the long term sustainability of ACA as it was based on ensuring enough healthy people buying health insurance to offset costs for providing subsidizing insurance to those who could not afford or were ineligible for employer sponsored insurance.
I will update as more details are made available and encourage you to follow or share this article via or .___
|$95 or 1% of income||$285 or 1% of income||$9,800|
Obamacare/Affordable Care Act Tax Forms
No Mandatory Health Insurance: Disadvantages
It takes a very savvy healthcare consumer to score discounts from providers, not all of whom will necessarily go along with such requests. Normally, insurance companies, not individuals, are the ones negotiating with hospitals and doctors to lower prices for large member groups.
The main drawback when health insurance isn’t mandatory, however, is the risk you assume when choosing the self-pay route. The downside of going health insurance-free could be substantial if you end up needing expensive medical care and you don’t have the money to pay for it from savings or your monthly income.
“You’re one major accident or illness away from falling into long-term debt, as medical bills can be quite excessive out of pocket,” Steiner says.
Do You Qualify For An Exemption
The point of the Affordable Care Act is to make life financially easier for Americans, so those who cant find health insurance quotes that fit their budget may not have to pay up.
There is a list of exemptions that you may already qualify for, with the most common exemption being a financial hardship. If the minimum cost of health coverage would equal more than 8% of your household income, you may not have to pay a dime. Other exemptions include:
- You are a US citizen living abroad or certain noncitizens
- Not lawfully present in the US
- Member of a healthcare sharing ministry
- Member of a Federally-recognized Indian Tribe
- You are incarcerated
- You are a member of certain religious sects
Keep in mind that if anything on this list applies to you, you still may be required to pay your fine for not having health insurance. You still need to check and file for an exemption next tax season.
You May Like: How To Obtain A Life Insurance License
Recommended Reading: Starbucks Dental Benefits
How Penalties Are Assessed And Collected
For tax years between 2014 and 2018, if you qualify for health insurance and dont meet the exemption requirements, but still choose to remain without coverage, the IRS will assess penalty fees through your tax return. This fee is calculated as either a flat rate, or a percentage of your qualifying annual household income, whichever rate is higher.
Like any other tax, its deducted from your refund or added to your balance owing. However, unlike other outstanding taxes, the IRS is limited in the actions it can take to recover health insurance fees.
Ri Health Insurance Mandate
Health insurance is a requirement in the state of Rhode Island.If you go without continuous health coverage, you might pay a penalty when you file your taxes in 2021. See below for more information about the health insurance mandate and how it might affect you.
Better yet, sign up for coverage through HealthSource RI today to avoid a tax penalty later.
COVID-19 Hardship ExemptionIf you are looking for more information about exemptions from the penalty fee, please see the exemptions section below. Additionally, the State of Rhode Island recognizes that the COVID-19 pandemic has brought about unusual and unanticipated circumstances for many individuals. As a result, HealthSource RI filed a regulation expanding its criteria for qualification for the Hardship Exemption to include a COVID HARDSHIP, which can be claimed on an individuals RI Personal Income Tax return by using code 19. Filers who may claim this exemption DO NOT need to file an exemption application with HealthSource RI.
This exemption is valid for use ONLY for the months of April 2020 through December 2020 and may be claimed directly if the taxpayer attests that, due to a direct impact of the COVID-19 pandemic, the following statements are true:
1) The individual lost minimum essential coverage during the 2020 calendar year, and
2) The individual suffered a hardship with respect to the capability to obtain minimum essential coverage during the subsequent months in the 2020 year.
Is There A Penalty For Not Having Health Insurance
Health insurance is a major concern for any sensible adult. It means the cost of medical treatment is shared between you and the insurance company. A look at a health insurance policy will tell anyone that health insurance companies pick up the lions share of any expense. Coverage is a benefit worth having, but is it required? Would you be forced to pay a penalty if you do not have health insurance?
Exemptions From Health Insurance Requirement
There are a number of exemption provisions under which you may avoid the requirement to have health insurance. These provisions include:
- Unaffordable careif minimum coverage would cost more than 8 percent of your household income, you may qualify for an exemption.
- No tax filing requirementhaving an income below the Internal Revenue Service’s filing threshold exempts you from the coverage requirement.
- Hardshipif you experience a hardship that prevents you from getting coverage, the Health Insurance Marketplace may certify your exemption. Situations include those whose pre-existing health coverage was canceled due to the ACA.
- Short coverage gapsif your coverage lapses for less than three consecutive months, you will not be charged a fee for the uninsured time.
- Membership in an exempt groupNative American tribes, prisoners, undocumented immigrants, members of health care sharing ministries and those whose religious beliefs prevent them from having insurance are exempt from the requirement to be insured.
Not sure if you are exempt from the tax penalty or from the requirement to purchase health insurance? See “Are You Exempt From Health Care Coverage?” to help determine whether you might be eligible to waive the tax penalty entirely and apply for a health care exemption.
Recommended Reading: Starbucks Benefits For Part Time Employees
What If I Dont Enroll In Health Insurance At All
As of 2019, theres no more individual mandate. This means you dont have to enroll in health insurance to avoid paying a penalty fee, in most states.
If youre 30 or older and want to enroll in a Catastrophic plan, you must claim a hardship exemption to qualify. Catastrophic health plans offer more affordable coverage. And they can protect you from high medical costs if youre seriously hurt or injured. If youre under 30, you can enroll in a Catastrophic plan without any kind of exemption, though. For people over 30, youll need to qualify for a hardship or affordability exemption. Some examples of hardship exemptions are homelessness, domestic violence, the death of a family, or experiencing a fire or other natural disaster. Once granted an exemption, you can see every Catastrophic plan available based on where you live on the Marketplace.
How To Get Enrolled
Whether you live in a state with an individual mandate or not, you can get the coverage you need during Open Enrollment. The annual Open Enrollment Period is the time when all eligible Americans can shop the Health Insurance Marketplace. There, you can pick an Affordable Care Act-compliant health plan for 2020. Getting an Obamacare health insurance plan means knows you are getting care that meets certain standards. And this is in terms of both level of coverage and consumer protections. Also, when you shop the Marketplace for health insurance, youll also see what kinds of subsidies you qualify for to make that coverage more affordable. These subsidies are based on household income, and they can be very significantpeople who enroll on HealthSherpa pay an average of $47/month, and 94% of people qualified for subsidies during 2020s Open Enrollment. You can also see if you qualify for Medicaid or Medicare on HealthSherpa.
Ready to get started? Shopping the Marketplace with HealthSherpa is streamlined and straightforward. Plus our Consumer Advocate Team is on-hand to help each step along the way at .
How Big Were The Penalties
The IRS reported that for tax filers subject to the penalty in 2014, the average penalty amount was around $210. That increased substantially for 2015, when the average penalty was around $470. The IRS published preliminary data showing penalty amounts on 2016 tax returns filed by March 2, 2017. At that point, 1.8 million returns had been filed that included a penalty, and the total penalty amount was $1.2 billion an average of about $667 per filer who owed a penalty.
Although the average penalties are in the hundreds of dollars, the ACAs individual mandate penalty is a progressive tax: if a family earning $500,000 decided not to join the rest of us in the insurance pool, they would have owed a penalty of more than $16,000 for 2018. But to be clear, the vast majority of very high-income families do have health insurance.
Today, the median net family income in the United States is roughly $56,500 For 2018, the penalty for a middle-income family of four earning $60,000 was $2,085 . This is far less than the penalty a more affluent family would have paid based on a percentage of their income.
The penalty could never exceed the national average cost for a bronze plan, though. The penalty caps are readjusted annually to reflect changes in the average cost of a bronze plan:
The maximum penalties rarely applied to very many people, since most wealthy households were already insured.
The Future Of Individual Health Insurance Mandates
Over the past year, a few additional states have considered or are considering individual mandates, including:
However, so far, none of these states havemanaged to ultimately pass state individual mandates.
Lawmakers who push for individual mandate laws argue that its needed to incentivize people to get health insurance. The argument is that if not enough healthy people sign up for coverage, the pool of insured individuals will be made up mostly of sick people, and health premiums will rise for everyone. However, many states have attempted and failed to pass individual mandate legislation, and these laws remain politically controversial.
According to Forbes.com, the new Biden administration is expected to bring back the federal tax penalty for going without ACA-compliant health coverage. Its unclear yet whether he would do this through an executive order or legislative reform.
Affordable Care Act & Taxes
This chart explains how the health care law affects your tax return. Use the Health Care Law and You chart to see how the law will affect you.
Under the recently enacted Tax Cuts and Jobs Act, taxpayers must continue to report coverage, qualify for an exemption, or pay the individual shared responsibility payment for tax years 2017 and 2018.
Does Internal Revenue Service Still Need Health Insurance
A. The specific required which calls for most Americans to preserve health insurance coverage still exists. However beginning with the 2019 tax obligation year, there is no more a fine for non-compliance with the specific required. So practically, the regulation does still need a lot of Americans to preserve health insurance insurance coverage
Recommended Reading: Does Starbucks Provide Health Insurance For Part Time Employees
Are There Affordable Options
There are several ways that you can obtain affordable health insurance. If you are under 26 years old, you may be able to get coverage with your parents’ health insurance plan.Or, you might be able to get coverage through a spouse or domestic partner. Other consumers should explore health insurance offered by their employer, or even independent health insuranceplans that may be available outside of the Obamacare marketplace exchanges.
However, the most affordable and accessible option may be through your state’s Obamacare exchange. These exchanges are websites set up to assist you in finding health insurance plans that are right for you. The cost of these plans varies significantly, and a tax credit can significantly lower your premium if you qualify.
When you’re choosing a plan, you may want to consider a high-deductible health plan , which offers lower monthly premiums but charges higher deductibles. If you do choose this option, you could set up a Health Savings Account . An HSA is an account into which you can save pre-tax dollars that you can spend on medical payments, including copays and deductibles.
Understand And Avoid Health Care Reform Tax Penalties
The Affordable Care Act has brought new options for health care coverage to millions of previously uninsured Americans. While you can still choose not to purchase health insurance, that decision may come at a cost, for tax years 2014 through 2018. Eligible taxpayers who remain without insurance may be required to pay penalties, though there are exemptions for which you may qualify.
No More Tax Penalties
In 2018, the ACA tax penalty was $695 for adults and $347.50 for children, or 2% of ones annual income, whichever amount was more. However, on December 22, 2017, when President Trump signed the Tax Cuts and Jobs Act, it repealed the ACA-related tax on Americans who refuse to purchase health insurance.
As of 2019, Americans without health insurance are not taxed by the government. However, individuals and families who choose to go without health insurance do so at their own risk.
Also Check: Can Parking Tickets Affect Your License
Get More With These Free Tax Calculators And Money
See if you qualify for a third stimulus check and how much you can expect
Know what dependents credits and deductions
Know what tax documents you’ll need upfront
Learn what education credits and deductions you qualify for and claim them on your tax returnGet started
The above article is intended to provide generalized financial information designed to educate a broad segment of the public it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.
You May Like: Starbucks Open Enrollment 2018
Affordable Care Act’s Coverage Mandate
Under the ACA, also called “Obamacare”, Americans who were not otherwise eligible for an exemption were required to have health insurance coverage for themselves and their families. Failure to have minimum health insurance triggered a tax penalty at the same time, the ACA allowed for the creation of a premium tax credit to help Americans offset some of the cost of getting health insurance through the healthcare marketplace.
This rule changed in January 2019, when the tax penalty mandate for health insurance was eliminated. While the ACA technically still exists, Americans who choose not to maintain health insurance for themselves or their family members in 2019 and beyond won’t be penalized at tax time. It’s estimated that as many as four million Americans will choose not to have health insurance coverage this year as a result of the penalty being eliminated.
As a result of the American Rescue Plan of 2021, all taxpayers with insurance bought on the ACA Marketplace are now eligible for the ACA premium tax credit previously, filers were ineligible if their income exceeded 400% of the federal poverty line.
Coverage Unaffordable Or Too Skimpy
- An employer-sponsored plan is considered unaffordable if the employee contribution for premiums is more than 9.83 percent of household income in 2021 for employee-only coverage .
- To provide minimum value, an employers plan has to cover at least 60 percent of average expected medical costs, and provide substantial coverage for inpatient care and physician services.
If an employers plan is unaffordable and/or doesnt provide minimum value, the employer would face the lesser of two penalty options: $4,060 per employee receiving premium subsidies in the exchange , OR the $2,700 per full-time employee penalty described above.
Consider a business that has 120 full-time employees and offers coverage, but its either not affordable and/or doesnt provide minimum value: If 70 employees get subsidies in the exchange in 2021, the employer would pay a penalty of $243,000 for the year x 2,700 = 243,000, since thats smaller than the alternative penalty calculation .
But if only 20 of the employees get subsidized coverage in the exchange, the employer would pay $81,200 for the year , since thats smaller than the alternate calculation of x 2,700, which would be $243,000.
Recommended Reading: Does Starbucks Provide Health Insurance For Part Time Employees