The deadline is just weeks away for Americans to get health insurance and avoid the tax penalty. By March 31, 2014, every American must have health insurance unless they qualify for an exemption (see below) or face the penalty.
The tax penalty, which will be phased in over the years, is the greater of these two amounts:
- $95 per adult or 1% of household income for 2014,
- $325 or 2% of household income for 2015,
- $695 or 2.5% of household income for 2016 and beyond (indexed for inflation)
- The penalty for an uninsured child is half the adult penalty.
For a single individual with a taxable income of $32,000, the penalty would be $320.
For a family of five with a household taxable income of $56,000, the penalty would be $560.
The Internal Revenue Service (IRS) will either deduct money from individual refunds or from tax credits.
Without insurance you could pay a sizable fee unless you qualify for an exemption. Those who qualify are:
- Individuals covered by Medicaid and Medicare
- Incarcerated individuals
- Individuals not lawfully present in the U.S.
- Members of a Native American tribe
- Members of a religion conscientiously opposed to accepting benefits
As of January 2014, three million people have signed up for individual coverage and close to six million now qualify for Medicaid. The Associated Press reports that 42 percent of Americans are still opposed to the law, about the same as four years ago. Regardless of where you stand, Obamacare is here to stay so know what is required of you and your family.
Disclaimer: Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs.