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 the IRS free online tool to determine if you’re eligible for an exemption. A complete list of exemptions is available at Healthcare.gov.
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.