Tax season is underway, and while some Americans are looking forward to a nice refund, others are dreading the day they get slammed with penalties and additional payments. And if you didn’t sign up for health insurance last year, you may be kicking yourself.
In 2015, the uninsured rate among working-age adults was 13%, which was a 7% decrease since just 2013. Ultimately, the Affordable Care Act (ACA) made it easier for a lot of Americans to purchase health insurance policies; however, not everyone signed up. Since the government mandates that every U.S. resident must have health insurance (unless they qualify for an exemption), individuals who are uninsured are penalized.
Of course, that might eventually change now that there’s a new administration in the White House. For now, you should prepare for the 2017 tax season as if the individual mandate and associated penalties for not having health insurance are still in effect.
If you are uninsured for a full three months in a row, you will be required to pay a tax penalty that is calculated in one of two ways: It is either 2.5% of your total household gross income, or a flat rate of $695 per adult and $347.50 per child. You will pay whichever is higher.
Some individuals may be exempt from the Obamacare penalty. Those who don’t have health insurance coverage may not have to pay a penalty under the following circumstances:
- The cheapest health care policy costs more than 8% of your household income
- Having health insurance is against your religious belief
- You are incarcerated
- You have lived abroad for more than 12 months
- You qualify for a hardship exemption due to homelessness, bankruptcy, etc.
The easiest way to avoid the penalty is to simply sign up for health insurance. You can look into Obamacare health insurance policies at Healthcare.gov or purchase coverage through your employer or a private insurer.
When you file your 2017 taxes, the government doesn’t care if you’ve been living a healthy lifestyle and don’t believe you need insurance coverage. Likewise, the taxman won’t care if you are happy to pay for your own health care expenses out-of-pocket. The reality is that every eligible U.S. resident must have health insurance. The question is: what policy will you sign up for?
For more information, talk to an expert at Bankers Fidelity about your insurance coverage options.
