Wednesday, December 9, 2015

No health insurance for 2015 or 2016? You may be facing a tax penalty

If you can afford health insurance but you choose to not enroll in coverage for 2016, you may be required to pay a fee when you file your 2016 federal income taxes. The fee is also called a penalty, fine, or the individual mandate.

A few facts about the individual mandate:
  • The fee is calculated one of two ways. The fee for not having health insurance if you can afford it is $695 per person in your household who doesn’t have health insurance or 2.5 percent of your income – whichever is higher. HealthCare.gov has a guide to estimate the fee you’ll have to pay if you don’t have health insurance. 
  • The fee for 2015 is lower than for 2016. For 2015, the fee for not having health insurance if affordable insurance is available to you is $325 per person or 2 percent of your annual household income – whichever is higher. The fee is calculated based on the number of months you, your spouse, or your tax dependents went without qualifying coverage, such as an employer-sponsored health plan, Medicare, Medicaid or coverage through Washington Healthplanfinder.

    In some cases, the fee may be higher than buying health insurance through Washington Healthplanfinder. You can look at plans and find out if you qualify for help at www.wahealthplanfinder.org
  • For some people, exemptions from the fee are available. People with very low incomes and individuals who meet other specific conditions can receive an exemption from the requirement to have health insurance and will not have to pay the fee. Additional information about exemptions and a tool that helps you determine if you qualify for an exemption is available on HealthCare.gov. 
If you need health coverage and want to avoid the fee for 2016, the deadline to enroll in a plan is Jan. 31. If you don’t enroll by then, you could have to wait another year to get coverage and may have to pay the fee when you file your 2016 income taxes. If you want coverage that starts on Jan. 1, you need to enroll by Dec. 23.

More information about the individual mandate on the Internal Revenue Service's (IRS) website.