What is the Penalty for Not Having Health Insurance?

iStock_000004401053XSmallAs you may know by now, the Affordable Care Act removed many of the obstacles that often prevented Americans from affording health insurance. States were given the option to create their own insurance marketplaces, or to participate in the federally-run exchange. Here in California, we built Covered California, and many Californians enrolled in health insurance policies for the first time.

However, some citizens still do not have health insurance. Many of those will now owe a penalty on their taxes, known as the “shared responsibility payment”, when they file their tax returns in the spring.

The penalty doesn’t apply to everyone who failed to enroll in healthcare coverage. There are certain exceptions to this rule, although in most cases they are fairly obscure. You can find a full list of exceptions at the Healthcare.gov website. Those who do not qualify for these exceptions, and who did not maintain health insurance coverage for at least nine months of the year, will be charged the penalty.

So how much is the penalty, anyway? The Affordable Care Act set it up so that the penalty would be gradually phased in during the first few years. The idea was to give uninsured people time to make a decision and $347.50 per child, to a maximum of 2,085. In 2017, the percentage will remain at 2.5 percent, but the flat fee could be adjusted according to inflation.

Obviously, the easiest way to avoid the penalty is to enroll in a health insurance plan. If you didn’t enroll last fall, you’re out of luck for 2016, but you can prevent a big penalty next year. Open Enrollment begins on November 1, and we can help you with your application.

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