Most Americans had until March 31, 2014, to begin the enrollment process in health coverage under the Affordable Care Act of 2012. To help ensure consumers would take the need to purchase health care seriously, the Act set out tax penalties.
Tax preparer H&R Block estimates the majority who remain uninsured after the deadline will qualify for penalty waivers. However, you may be one of the four million uninsured the company believes won’t qualify for a waiver and will face a tax penalty this year.
What is the penalty for going without insurance? Penalties start small but increase each year. The penalty for tax year 2014 is 1% of adjusted gross income (AGI) or $95 per adult and $47.50 per uninsured child, whichever is higher. In 2015, the penalty increases to $325 per adult or 1% of AGI and $162.50 per child. And in 2016 it will rise to 2.5% of AGI or $695 per adult, with an additional $347.50 per child. High wage earners face additional tax implications.
Exceptions to penalties may apply if you missed the open enrollment deadline. Triggering events such as a job loss or a divorce may allow you to enroll after the open enrollment period. In addition, if you qualify for Medicaid in your state, you can enroll at any time.
To avoid tax penalties, and to have peace of mind concerning your health, talk to your insurance agent. Healthcare coverage may prove to be more affordable than you think.