In 2014, it was put into effect that most Americans had to have health insurance under the Affordable Care Act. Additionally, those who were required to have insurance, but opted not to get any could face a penalty for 2015.
For those who have employer insurance, Medicaid, Medicare or a private provider, no penalty will take place.
Those who didn’t have insurance in 2014, were giving a window from October 1, 2013 to March 31, 2014 to purchase an qualifying health insurance plan through their state or via the federal Health Insurance Marketplace.
For those who decided they didn’t want to purchase insurance before the deadline, TurboTax decided to create a penalty calculator that helps them estimate how much their penalty will be. The amount of the penalty varies for all individuals since it goes by family size and income. The good news is you are allowed to have a gap in your coverage as long as it does not last for more than three months.
For 2014, the annual one time penalty is $95 per adult or 1% of your total income. For uninsured children the penalty is $47.50 per child, with the maximum for the entire family being $285 annually.
Coverages is assessed on a monthly or prorated basis, which means that you will only have to pay a percentage of the penalty for the months that you don’t have insurance. This penalty will be imposed on your 2014 tax return and filed in 2015.
The penalty will increase each year. For 2015, the penalty is $325 per adult and $161.50 per child, with a maximum cap of $975 per family. This is approximately 2% of the income of the family depending on how much they make. Additionally, in 2016, the penalty will be about $696 per adult and $347.50 per child, with a maximum cap of $2,085 per family, which could be 2.5% of the total household income.
Some individuals won’t have to purchase healthcare insurance including those who do not make enough money to be required to file tax forms. Others who won’t be affected by the health insurance laws include certain religious groups and Indian tribe members.
If you have questions about the health care reform, make sure you stop by the TurboTax community.