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If you have not filed your taxes for 2018 yet, you may face a penalty if you didn’t carry health insurance for the entire year. Through 2018, all taxpayers that can afford health insurance must have it. If you chose not to have it, you may pay a penalty called the Shared Responsibility Payment when you pay your taxes.
What are the Fees?
For tax years 2018 and earlier, you may pay a penalty for each month that you or your dependents didn’t have health insurance. The Affordable Care Act determines what they consider ‘qualifying health coverage,’ which we discuss in detail below. If you didn’t have coverage meeting these requirements, you pay a fee for each month you didn’t have it.
You can figure out your fee with the following:
- 5% of the annual income you make above $12,000 (per person)
- Per person amount – $695 per adult and $347.50 per dependent under the age of 18
Your penalty is equal to the larger of these two numbers. If you had insurance coverage for part of the year, your penalty equals 1/12 of the annual penalty times the number of months you didn’t have coverage.
What is Qualifying Health Coverage?
As we stated above, the health insurance coverage you have, must be ‘qualifying.’ According to the Affordable Care Act, this means:
- Any health insurance plan from the marketplace
- Any insurance from your employer or COBRA plan
- Coverage from a student health plan
Policies that don’t qualify include those that offer only dental or vision, workmen’s compensation, or insurance that only covers one condition.Shop and compare insurance quotes.
In general, the policies must cover doctor’s visits, hospitalization, emergency care, maternity care, mental health disorder, prescription drugs, and wellness services.
Who is Exempt?
The Affordable Care Act does provide several exemptions that allow you to waive the penalty fee. They are as follows:
- If the least expensive insource with minimum coverage costs more than 8% of your income, you qualify for an exemption
- If you don’t make enough money to file taxes (per the law), you may be exempt
- If you have a hardship that makes it hard to get insurance through the marketplace, you may get an exemption (this is on a case-by-case basis
- If you don’t have insurance for three months or less, you don’t need to pay a penalty
- If you live in a tribe, are in jail, or have religious beliefs that make it impossible to get insurance, you may be exempt
After the 2018 tax year, though, the fees won’t exist. The above only applies to those that haven’t filed their 2018 taxes yet.
If you owe a fee, you’ll need to figure it into your taxes. If you overpaid for the year, the IRS will deduct the fee for your health insurance firm your refund. If you owe taxes, the IRS will add the amount to the amount you owe for taxes.
The penalty for not having health care could really add up, especially if you don’t carry it all year. Make sure you see if you qualify for an exemption if you didn’t have insurance so that you can avoid the hefty fines that come along for not having insurance.Get the right insurance coverage.