Thanks to the tax reform, beginning in 2019, the penalty for not having adequate health…
Obamacare, or the Affordable Care Act is now in the fourth year of providing health insurance.
However, it will only be the third year of reconciling the healthcare requirements and the health insurance premium tax credit on your tax return in the spring.
The fee, or insurance penalty tax, for going without health insurance increases each year. Here’s how to determine if you will need to report the penalty on your tax return and how much it might be.
If you went without health insurance this year, you’ll be subject to an annual fee. The fee does not provide health insurance and is assessed after the year is over when you file your tax return.
The penalty fee is calculated based on your Modified Adjusted Gross Income and is due with your tax return on the tax deadline.
The tax penalty for no health insurance varies by year. The 2017 insurance penalty tax is the higher of:
2.5% of income or $695 per adult/$347.50 per child (up to $2,085 per family).
The 2018 insurance penalty fee will increase based on inflation.
If you are filing a tax return with an extension or an amended return for a prior year, the penalty is different each year. Penalty tax by year is the higher of:
The fee is calculated per month and includes household members you claim as dependents. For each full month without coverage, you’ll pay 1/12 of the above fee.
The maximum penalty using the % of income is the national average premium for a Bronze plan. The average price of a Bronze plan is:
When you file your tax return, most online tax services will automatically calculate your penalty.
You will report the health insurance premium tax credit penalty on your tax return.
You do not have to pay the penalty if you have minimum essential coverage. If you have insurance already through a job or the government you won’t have to worry about the penalty. This includes marketplace health insurance, individual insurance, health insurance through an employer, COBRA, Medicare, Medicaid, CHIP, Tricare and veteran health insurance plans.
You will not need to pay the penalty for Obamacare fee if you qualify for any of the following:
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