You’re all set if you already have healthcare coverage, but if you have not applied for coverage, you’re in for a big surprise. The $95 flat fee will no longer be the same for the upcoming years.
For the first year of the ACA law, the fee was the lowest it will ever be. Moving forward, the penalty will rise. So, if you are a U.S. citizen or legal resident and have not purchased any health insurance through the Marketplace, you will be faced with the Affordable Care Act penalty. Under the ACA, every American and legal resident is required to have health coverage or you will be penalized with a fee. However, if you qualify for a coverage exemption, you will not have to pay the penalty.
If you don’t have coverage, the fees are as follows:
- 2014: 1% of household income or $95 flat fee per adult and $47.50 per child, whichever number is higher
- 2015: 2% of household income or $325 flat fee per adult and $162.50 per child, whichever number is higher
- 2016: 2.5% of household income or $695 flat fee per adult and $347.50 per child, whichever number is higher
- Beginning in 2017, the tax penalty will be adjusted annually for inflation
You may be asking, “Why is this so important to Liberty Tax®?” The ACA has changed the way Liberty Tax® has prepared millions of tax returns and it has created an intersection of health insurance and tax preparation. More and more people are seeking assistance with their tax returns and our ACA advisors can explain and breakdown how the tax credits and penalties can affect your income tax return.
For more healthcare and tax updates, please visit our ACA resource page.