The coming affordable healthcare act penalty

Open Enrollment at the website starts tomorrow. This year it will be open from November 15, 2014 Until February 15, 2015 for health care coverage in 2015. This is the second year that the so called “marketplace” is open to the public for purchasing health insurance. Regardless of which side of this controversial program you might fall on, it is hard to dispute that it has created at the very least a lot of fodder for news and media. It has also brought about change in the health care industry and only time will tell if the system works.

If you used the marketplace to purchase your health insurance you might not have realized that there are a few responsibilities that you didn’t previously have. One of those responsibilities is that you must file a tax return regardless of what your income level is.

The tax year 2014 is also the first year that fees (aka “the penalty”) will be applied to tax payers who do not have health insurance. For 2014 it will be 1% of your adjusted gross income, and increase to 2% in 2015, and 2.5% in 2016. Here is a partial list of possible exemptions from “the penalty:”
– You have health insurance. (duh!) The proof of this should be sent to you from your health insurance company on form 1095.
– You’re uninsured for less than 3 months of the year.
– The lowest-priced coverage available to you would cost more than 8% of your household income.
– You don’t have to file a tax return because your income is too low (Learn about the filing limit (PDF))
– You’re a member of a federally recognized tribe or eligible for services through an Indian Health Services provider
– You’re a member of a recognized health care sharing ministry
– You’re a member of a recognized religious sect with religious objections to insurance, including Social Security and Medicare
– You’re incarcerated (either detained or jailed), and not being held pending disposition of charges
– You’re not lawfully present in the U.S.
– You qualify for a hardship exemption

This is a complicated matter that many are not ready for. Some might even argue that the government is ready. If you have any questions please don’t hesitate to contact your insurance company or your knowledgeable tax advisor.
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