So, you didn’t have insurance and none of the exemptions to the individual mandate apply to you? You may be subject to a financial penalty. And the fines keep going up every year. For example, the fines in 2015 are about double what they were in 2014, according to H&R Block. Among their customers who were penalized, the average fine went up from $172 to $383.
Of course, if we had universal healthcare – such as Medicare for All – none of this would be an issue because everybody would automatically qualify for coverage – no fuss, no muss. Unfortunately, at this time we only have Medicare for Americans who are 65 or older, whereas in Australia, they have Medicare for everyone, from birth on. (Smart Aussies!)
At least we’ve taken a step toward a real solution with the Affordable Care Act. But one of its more unpopular elements is the “individual mandate.”
- What is the Individual Mandate under the Affordable Care Act?
It’s a requirement that US citizens obtain health insurance that has certain “minimum essential coverages.” Failure to obtain such health insurance will result in a financial penalty, unless you qualify for one of the exemptions outlined in the Act.
Which brings us to our next question –
- No exemptions apply to me and I didn’t have insurance or I had schlocky insurance that didn’t count? Now what?
Well, you may be on the hook for a penalty.
3. How much is my penalty? Good question! For one thing, the minimum penalty changes every year. The minimum penalties are higher in 2015 than in 2014, and will be higher in 2016 than in 2015. Here’s a link to the fees for not being covered, by year (2014, 2015, 2016).
As for your particular situation, it’s a fairly complicated calculation if you have multiple family members with different types of insurance and/or coverage gaps during the year. That’s why you should consider getting help from a qualified tax preparer.
4. Come on! I just want a general idea of my penalty. Ok, there are lots of calculators available on the Internet. The problem is, which are right? Who knows, really.
But this calculator, the Individual Shared Responsibility Payment Estimator, is provided courtesy of the Taxpayer Advocate Service at the IRS. It takes into account very specific information (such as coverage gaps experienced by individual family members). And it’s got to be right, since it’s from the IRS? Golly, we hope so.
Try it, but be safe and consult a qualified tax preparer to make sure. You can see for yourself if the estimator is accurate or not. (Below are tax filing resources that might help.)
5. How many people paid a fine for failing to have coverage in 2014? More than you think. Would you believe 7.5 million taxpayers paid about $1.5 billion in fines, as of July 2015, according to Dan Mangan of CNBC?
6. But I heard the IRS can’t collect the penalty, so do I really have to pay it? Some say yes, some say no. It’s well known that the IRS has limited ways to collect the penalty for not carrying health insurance. They can’t use their usual methods like attaching a lien to your personal assets, bank accounts or wage income. And the IRS isn’t permitted to criminally prosecute anyone or impose additional penalties for failing to pay.
At this time, most of the material we’ve read indicates that all the IRS can do is deduct the penalty from any refund that you might be entitled to.
7. What happens if I don’t have a refund coming and I can’t or won’t pay the penalty? Some say your penalty will carry over to future years. Here’s a Daily Finance article about ignoring the penalty for not having health insurance. The situation continues to unfold, however, so even this may change at some point.
A thought from the HEAL Team:
The very idea that a person should be penalized for not having health insurance is abhorrent to us. The person is already suffering because they can’t get care if and when they need it! We believe healthcare corporations, including health insurers, should be the ones who are penalized for making healthcare too complicated and expensive. If you agree with us that health care should be universal, high quality, easy and affordable, instead of a hassle, join us. Together, we will win! Stay tuned for more on taxes and the ACA.
(Sorry, we have to make this disclaimer because we’re not attorneys or income tax specialists or anything like that.)
HEAL California makes no representations or warranties in relation to the information provided here, which we obtained from the IRS, TurboTax and other sources (see links, above). We at HEAL California are neither tax nor health insurance professionals. If you have any specific questions about your taxes or health insurance, you should consult a qualified tax professional and/or a licensed insurance agent.
Following are outstanding resources that we highly recommend if you need more information:
IRS: The-Individual-Shared-Responsibility-Provision
IRS: ACA-Individual-Shared-Responsibility-Provision-Calculating-the-Payment
And here are resources for help doing your income taxes, which could be free (depending on your income):
IRS: Free-Tax-Return-Preparation-for-You-by-Volunteers
Also, several income tax services allow you to use their online programs to file easy returns, if you search online for “free income tax help.” There may be more resources in your community, too!
