Here’s the Penalty for Not Having Health Insurance
The Affordable Care Act, or ACA, requires that most Americans buy health insurance — but not everyone signed up, and not everyone who did sign up kept their coverage. Millions could owe a tax penalty for not having health insurance, a fee that’s sometimes called the Obamacare penalty.
Who pays a penalty for no health insurance
If you go more than three full, consecutive months without health insurance, you might have to pay a tax penalty for that year. If you have health insurance for only one day of a month, it counts as a month with health insurance.
Here’s an example: Say you go without health insurance for all of January and February. Then you buy health insurance and it goes into effect on the last day of March. You would not be subject to a tax penalty for no health insurancebecause you didn’t go without a health plan for three full, consecutive months.
Cost of health insurance penalty
The penalty is calculated in one of two ways: either as a percentage of your total household adjusted gross income or a flat rate, whichever is greater.
- For tax year 2017, the penalty is 2.5% of your total household adjusted gross income, or $695 per adult and $347.50 per child, up to a maximum of $2,085.
- For tax year 2018 and beyond, the penalty amounts have not been announced, but are expected to increase.
A tax preparer, if you have one, or tax software can calculate any penalty for not having health insurance. Note that for the 2017 tax year, the IRS won’t automatically reject tax returns that don’t disclose whether you have health insurance. But taxpayers who don’t answer the health insurance question may be contacted for follow-up, according to the IRS.
Exemptions from health insurance penalty
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