What is the Affordable Care Act tax penalty? Under the Affordable Care Act (Obamacare), if you can get health insurance and choose not to, and you aren't exempt for other reasons, you may have to pay a tax penalty.
The article below is accurate for your 2017 taxes, the one that you file this year by the April 2018 deadline, including a few retroactive changes due to the passing of tax reform. Some tax information below will change next year for your 2018 taxes, but won’t impact you this year. Learn more about tax reform here.
Under the Affordable Care Act, if you can get health insurance and choose not to, and you aren’t exempt for any other reasons, you may have to pay a tax penalty. The tax penalty is calculated based on a percentage of your household income OR a per-person or per-family rate, whichever is higher.
For the 2014 tax year, the tax penalty amount is:
- Either 1% of your household income
- OR $95 per uninsured adult and $47.50 per uninsured child, up to $285 per family
In 2015, the amount increases to:
- 2% of your household income
- OR $325 per uninsured adult and $162.50 per uninsured child
Beggining in 2016, this amount increases again and adjusts for inflation every year after that.
The penalty amount is also based on the number of months you or your dependents were uninsured.
- If you’re uninsured for less than three consecutive months, you won’t have to pay a penalty for that time period. This is called a “short gap.”
- If you have more than one short gap in coverage during the year, your penalty exemption only applies to the first gap.
When you file your tax return for the year you were uninsured, your tax penalty will either be deducted from your refund or added to your tax bill. By law, the IRS may not use liens or levies to collect Affordable Care Act tax penalties, but they may take the penalty out of your expected tax refund.
Not sure if you are exempt from the tax penalty or from the requirement to purchase health insurance? See "Are You Exempt From Health Care Coverage?" to help determine whether you might be eligible to waive the tax penalty entirely and apply for a health care exemption.
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