How much will you owe for not having health insurance coverage in 2014?

The yearly fee is 1 percent of your income for the year or $95 per person in your household, whichever is higher. Many uninsured decided to just pay the $95 in 2014. However, they may owe much more than $95.

How much will you owe for not having health insurance coverage in 2014?

The Affordable Care Act states that every person in the United States must have minimum health coverage in 2014 or must pay a fee on their federal tax return.  This fee is sometimes called the “individual shared responsibility payment.”  In some cases, you may be able to get an exemption from the fee meaning you would not have to pay the fee (Read more about health insurance penalties).

If you didn’t have health insurance coverage in 2014, you’ll pay one of these two amounts when you file your 2014 federal tax return:

  • One percent of your yearly  adjusted gross household income. (If you made less than the tax filing threshold, about $10,000 for an individual or $20,300 for married filing jointly, is used to calculate the penalty.) The maximum penalty is the national average premium for a bronze plan, which, according to the Internal Revenue Service (IRS) was $2,448 per individual ($204 per month per individual), but $12,240 for a family with five or more members ($1,020 per month for a family with five or more members)
  • $95 per person for the year ($47.50 per child under 18). The maximum penalty per family using this method is $285. 

You make the payment when you file your 2014 income taxes, which will be due in April 2015. 

Many uninsured decided to pay the $95 peanlty in 2014.  However, they may owe much more than $95. The IRS provides two good examples of the penalty amounts that will be owed by a single individual with $40,000 income due $298.50, and a married couple with two children and $70,000 income will be charged $497 when they file their 2014 Income Tax Return by April 2015. 

The penalty for no 2015 coverage increases. You will be paying the higher of these two amounts:

  • Two percent of your yearly household income. (Only the amount of income above the tax filing threshold, about $10,000 for an individual, is used to calculate the penalty.) The maximum penalty is the national average premium for a bronze plan.
  • $325 per person for the year ($162.50 per child under 18). The maximum penalty per family using this method is $975. 

In 2016, it will be 2.5 percent of income or $695 per person, whichever is higher. 

It is important to remember that choosing to make the individual shared responsibility payment instead of purchasing minimum essential coverage means you will also have to pay the entire cost of all your medical care. You won’t be protected from the kind of high medical bills that can sometimes lead to bankruptcy. 

If you’re uninsured for just part of the year, one-twelfth of the yearly penalty applies to each month you’re uninsured. If you’re uninsured for less than three months, you don’t have to make a payment. 

You are considered covered if you have health insurance provided by your employer, health insurance you purchase in the Health Insurance Marketplace, most government-sponsored coverage (Medicare, Medicaid, CHIP, TRICARE, VA health coverage,), and coverage you purchase directly from an insurance company.

For more information or assistance, visit HealthCare.gov, or call the Health Insurance Marketplace call center at 1-800‑318-2596. TTY users should call 1-855-889-4325.  You can find local application assisters at localhelp.healthcare.gov or Enroll Michigan or some private insurance companies with plans in the Marketplace. 

For more answers to your questions about health insurance, go to healthcare.gov Q&A or the Health Insurance FAQs - eXtension.  Also see previous news articles about health insurance choices at Michigan State University Extension. 

Michigan State University Extension is providing education about health insurance basics this year, including the why, what and how for making a smart decision.  Find out about Smart Choice: Health Insurance workshops and factual information here

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