When the Affordable Care Act was enacted in 2010, it brought with it many changes to our health care system. It’s now considered a requirement to have health insurance, otherwise you may face high penalties for going without coverage. These penalties apply to everyone in your household, including children.
What is Acceptable Health Insurance Coverage by the Affordable Care Act?
Coverage through an employer, a student health plan, a plan purchased on their state or federal exchange, as well as plans purchased directly through a carrier all qualify as the appropriate coverage and therefore no penalties are given. The government categorizes this as being appropriately covered.
For those who are enrolled in special types of health insurance, like those that cover cancer or various other conditions, or health insurance that is considered limited coverage – these penalties will also apply. There are exceptions to this rule, which are detailed further here.
The Penalties for Being Uninsured
Penalties have increased this year, and will continue to increase in 2016 for those that decide to go without coverage. Currently, in 2015, penalties are $325 per adult or 2 percent of applicable income, whichever is greater. Applicable income is income that is above the filing threshold. The threshold in 2015 for an individual is $10,300 and $20,600 for a family. In 2016, the penalties will increase to $695 per adult, or 2.5 percent of an individual’s income. In both cases, the flat dollar penalty for children is half of what it is for adults. Therefore, in 2015 this is $162.50, and in 2016 will be $347.50. Penalties are due at the time you file your income taxes.
For example, if a family of three has an income of $110,000, their filing threshold is $20,600. Their applicable income is $89,400 ($110,000 – $20,600). Therefore, $89,400 times 2 percent equals $1,788.
First – this family must figure out which is greater; the flat dollar penalty or percentage of their income. This family has two adults and one child, which adds up to $325 + $325 + $162.50, which equals a total penalty of $812.50. They must pay the $1,788 because it is greater.
As you can see, opting to not have health insurance can be extremely costly. It makes more sense for both your health and wallet to make having health insurance a top priority. There’s no way to predict whether you’ll become ill and need medical insurance, so it’s best to play it safe and have coverage.
Where to Get Help With Your Insurance Choices
Choosing to have an HSA for America Personal Advisor guide you through the process of securing health insurance and making it fit the needs of you and your family is the first step to obtaining coverage. No matter what questions or concerns you have, your Personal Advisor will be there to guide you through the process.
Do you have concerns about health care related tax penalties? Do you need help finding a health insurance plan?
Wiley Long is President of HSA for America, and a passionate advocate for consumer-based solutions that will improve price transparency and lower health insurance and medical costs for people purchasing individual and family health insurance plans.