Uninsured, Penalties, and Exemptions

Penalties:

Individuals who opt out of purchasing health insurance will have to pay the individual mandate Penalty for the time that they are without coverage for that year, unless they qualify for an exemption.

If you or your dependents are uninsured, there are 2 ways in which the fee will be calculated for not having health coverage. You will either pay a flat fee or a percentage of your household income, whichever is higher.

In 2015 the fee calculations are as follows, and the higher of these two amounts will be assessed.

  • $325 per adult ($162.50 per child under 18) not to exceed $975 per family
  • 2% of your annual household income. Only the amount of income above the tax filing threshold (approx. $10,000 per individual) is used in this calculation. The maximum penalty is determined is equal to the national average premium for a bronze plan.

In 2014 the fee calculations are as follows, and the higher of these two amounts will be assessed.

  • $95 per adult ($47.50 per child under 18) not to exceed $285 per family
  • 1% of your annual household income. Only the amount of income above the tax filing threshold (approx. $10,000 per individual) is used in this calculation. The maximum penalty is determined is equal to the national average premium for a bronze plan.

Exemptions

If you are uninsured, any of the following criteria may qualify you for an exemption from the penalty.

  • The lowest-priced coverage available to you exceeds 8% of your household income
  • You are uninsured for less than 3 months out of the year
  • You aren’t required to file a tax return due to your level of income is too low based on the filing limit
  • You are a member of a recognized health care sharing ministry
  • You are a member of a recognized religious sect with religious objections to insurance, including, but not limited to Medicare and Social Security
  • You are eligible for services through an Indian Health Service provider
  • You are a member of a federally recognized tribe
  • You are not lawfully present in the United States
  • You are currently incarcerated serving a term in jail or prison (not including being detained pending disposition of charges
  • You meet the qualifications for a hardship exemption

Paying the Fee

The fee is deducted from your federal income tax return for the year you are without coverage. Most people will file 2014 returns in early 2015 as well as their 2015 returns in early 2016.

If you are uninsured for a portion of the year, 1/12 of the yearly fee will apply to each month you do not have coverage.

Should you not pay the penalty upfront, the IRS will hold back the amount of the fee from any future tax refunds. However, there are no levies, liens, or criminal penalties for failing to pay the fee.

How to find coverage:

If you are currently uninsured, you can purchase job-based insurance, or private health insurance (not job-based) that meets the minimum essential coverage requirement. Or you can enroll in the Marketplace for a plan. All plans in the Marketplace will meet the minimum essential coverage requirement, preventing you to have to pay the penalty.

The 4 ways in which you and your family can apply for coverage through the Marketplace are as follows:

  • Apply online- To apply online, you will be asked to set up an account. You can visit the Get Coverage page and start out by selecting your state and clicking the “Apply Now” link. Once you do this, you will be prompted to provide some basic information and set up a secure account.
    • You will then be directed to fill out an application. The application process will require you to provide certain information regarding your income, current health coverage, household member information, etc.
    • Once the application process is completed, you will be able to view your eligibility results and all the options for coverage that you and your family are qualified for. You will also be able to determine if you are eligible for other savings, including the premium tax credits. You may also know if you qualify for Medicaid or CHIP coverage.
    • Once you review your results, you will now be prompted to enroll in the plan that you choose. You will be provided your new insurance company contact information so you can finish enrollment and make your first payment
  • Apply by mail – You can send in your application by mail by filling out a paper application. As soon as you get your eligibility results, you can finish the enrollment process either online, or over the phone through the Marketplace Contact Center at 1-877-637-0040.
  • Apply over the phone – If you choose, you can bypass the mailing option by completing your application and enrollment over the phone with a Marketplace Call Center Representative at 1-877-637-0040. Phone lines are open 24 hours, 7 days a week.
  • Apply in person – If you prefer to apply and enroll in person, or need guidance in the processes, you can locate an assister who will sit with you and help you in this process. Along with helping you with the whole application and enrollment processes, they can answer any questions and work with you in choosing a plan that best fits your needs. Visit HealthCare.gov to locate an assister near you.