Yesterday’s post discussed some of the IRS penalties attached to non-payment, missing information, or late payment of taxes.
While the passage of the Affordable Care Act allowed millions of uninsured people to access health care coverage and laid the groundwork for more extensive employer-based coverage, it also came with a penalty attached for non-compliance. If you’re now among the millions of Americans with new health care coverage, you may not know about this penalty.
Generally if the IRS determines you earn enough to purchase a policy on the insurance marketplace you are required to do so unless you have employer-sponsored coverage. If the policies you purchase aren’t sufficient for you and your qualifying dependents per IRS standards, you could still incur a penalty. Here is the breakdown for the 2015 and 2016 tax years:
2015: Fines will be $325.00 per adult and $147.00 per child to a maximum of the higher of either $975.00 or 2 percent of your income.
2016: Fines will increase to $695 per adult, $347 per child to a maximum of the higher of either $2085 or 2.5 percent of your income.
If you are a low-income person, you can obtain a waiver that will exempt you from both the penalty and the purchase requirement. While this may leave you uninsured if you live in a non-Medicaid expansion state, you won’t have to worry about being hit with a hefty fine if you can’t afford coverage for yourself and your family.
Love it or hate it, the ACA will be a part of our healthcare landscape for the foreseeable future. By understanding the IRS penalties attached to the ACA, you can exercise the option of either obtaining a low-income waiver, purchasing coverage, or paying the penalty at tax time.
As with any complex tax matter, it’s best to check in with a qualified tax advisor who can guide you in making the best decision based on your unique circumstances and tax scenario. You’ll learn whether or not you qualify for a waiver, and you’ll better understand all the options available to you.