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What You Need to Know About the Health Insurance Penalty

What you need to know about the penalty for not having Health Insurance - TaxAct Blog

With the Affordable Care Act (ACA) came the requirement that nearly every American must have health insurance. This requirement is sometimes called the individual mandate.

Yet, despite the strict requirement, many people who are healthy wonder if obtaining insurance is really worth it financially. The same question is often raised – should I pay for insurance if I may never use it?

As a person with a clean bill of health, that’s a valid question. However, before answering, a few details should be considered.

There is more than one reason why having health insurance is a good idea.

  1. Under the ACA most preventive services are covered with little or no cost to you.
  2. With insurance, you are protected from paying the full cost of care if you have a serious accident or illness.
  3. Being insured grants you access to discounted pricing your insurance company negotiated with pharmaceutical companies, doctors and hospitals in your provider network. That means you pay less for the care you use.
  4. Avoiding the penalty for not having health insurance can save you money.

The penalty for not having health insurance in 2017 may cost you.

If you do not have minimum essential coverage for more than two months, meaning you don’t meet the ACA coverage requirements, you may be required to pay a penalty when you file your 2017 taxes. All medical plans on the ConnectedHealth Marketplace meet the requirements for minimum essential coverage with the exception of short-term coverage.

The penalty is assessed to each member of your household that isn’t covered. Your household includes yourself, your spouse (if you are married) and your dependents.

The amount paid is calculated two ways. You are responsible for whichever is higher:

  • $695 per adult and $347.50 per child under the age of 18 (maximum family penalty is $2,085)
  • 2.5 percent of your household income (The maximum penalty when calculated this way is the cost of the yearly premium for the national average price of a Bronze plan sold on the federal Marketplace.)

Think about the big picture.

If you are still on the fence about enrolling for 2017, keep in mind that having coverage can end up adding money to your wallet or bank account in the long run. For many, the money spent in premiums each year will be far less than the penalty paid for not having coverage at tax time.

But, don’t delay!  The open enrollment period for 2017 coverage only lasts until Jan. 31, 2017.

After that, you can only sign-up if you’ve had a Qualifying Life Event, such as a change to your family status (e.g., marriage, a new child, etc.), loss of previous coverage or relocation to a new area.

If you have questions about whether you’re at risk for paying the penalty, visit the ConnectedHealth Marketplace to reach a licensed agent by phone or chat.

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