I Don’t Have Health Insurance – What Tax Penalties Will I Face Under the Affordable Care Act?

The deadline to purchase health insurance under the Affordable Care Act was March 31, 2014.

Those that already have health insurance that meets minimum essential requirements under the Affordable Care Act whether through an employer, Medicaid, Medicare, or private insurance, don’t have to worry about the requirement to purchase health insurance.

If you were uninsured and didn’t purchase health insurance or chose to forgo coverage by that date, you may face a tax penalty on your 2014 tax return, the one you file in 2015, unless you qualify for an exemption.

How Much is the Tax Penalty?

The health care reform tax penalty is based on your family size and income and you will not be penalized for a gap in coverage that is less than three consecutive months within a single year.

The tax penalty is also sometimes referred to as an “individual responsibility payment.” For 2014, the annual one-time tax penalty will be $95 per adult, or one percent of your total income, depending on your income.

For uninsured children in your family, the penalty is $47.50 per child, with a family maximum of $285 for the year. The tax penalty is assessed on your 2014 taxes filed in 2015.

Then each year following the penalty increases – in 2015 the penalty is $325 per person, $162.50 per child or two percent of your income and by 2016, it rises to $695 per adult, $347.50 per child or 2.5 percent of household income.

You can check out our penalty calculator to get an estimate or see if you are required to pay a tax penalty if you haven’t acquired health insurance.

Exemptions and Special Enrollment

There are some people who are exempt from the requirement to obtain health insurance and therefore will not owe a tax penalty when they file their 2014 taxes in 2015; a full list of exemptions is available here.

Healthcare exchanges through the Affordable Care Act will reopen for open enrollment on November 15, 2014 through February 15, 2015.

If you experience a life changing event, such as getting married or having a child, you may be eligible for a special enrollment period in which you can purchase health insurance through the exchanges within 60 days of that life event.

Whether you have to wait to purchase health insurance during open enrollment or are eligible to purchase in a special enrollment period, you may qualify for a subsidy or premium tax credit to help you pay for health insurance.

As with all tax laws, TurboTax has you covered and is up-to-date with the latest tax law changes.  If you have more questions about the Affordable Care Act and how it impacts you and your taxes, you can get answers from TurboTax Health.

Comments (9) Leave your comment

  1. If you live in Massachusetts the penalty is far greater (based on income). I was fined over $1300.00 for lapse of coverage in 2013. The state withheld my meager tax return and fined me the balance with interest (unpaid tax). The law/ penalty is unconstitutional. Nobody should be penalized for a “luxury” that is not always affordable and/or a choice.

  2. Patty,
    That is a horrible experience and I hope all your trouble and records will keep you from having to pay the penalty.

  3. I do not trust the IRS. I have employer sponsored coverage as of July 1 and I will not be paying the penalty. This is taxation without representation. The federal government has overstepped its bounds on this (big surprise). Let them try and fine me, I will be on my way to Washington with several others that I know who feel the same way. The IRS is a tax agency and it is very wrong that they were given the power to enforce this BS, BS the people had no say in! I will not comply!

    • Erin,
      I hope you are successful in fighting the penalty. The IRS is pretty big and has long arms. I appreciate that you are willing to fight the good fight for the benefit of the rest of us.

  4. This article left out the very critical detail that if one is not due a refund one does NOT have to pay the fine. Another incentive to minimize withholding.

    • You are right, Bob. The penalty will be calculated and is due, but the IRS currently has no collection authority if they cannot collect the tax from your refund.

  5. Do people really think the money they pay in this new affordable healthcare act is really going to usd for healthcare? Or is this New Found stream of cash, being paid to the government, going to be used as a slush fund like Social Security? I also noticed the article didn’t say anything about people who already have healthcare thru work having to pay taxes, on the healthcare, based on the total your employer says it pays for that healthcare. Most likely 20% of the policies value.

    • Lester,
      There is no tax being charged on employer paid healthcare at this time. It isn’t part of the current plan, not to say that it won’t be part of the plan in the future.

  6. I have tried since March 14, 2014 to get Obamacare. The marketplace made a clerical error and gave my social security number to someone else. They did not have the knowledge to correct the mistake – after getting help from the Appeals Board, special resolution team, and state senator that mistake was corrected in May. My husband and I finally completed application in May and now the Marketplace can’t get our application to the insurance company! After 4 months still have no insurance and we will be penalized on taxes. This is totally unfair after we spent months trying to get through the system and could not due to stupidity!

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