The Affordable Care Act individual mandate (Obamacare) requires most Americans to have health insurance or pay a tax penalty, unless you qualify for an exemption. Learn more about the ACA individual mandate, plans that qualify as minimum essential coverage, who qualifies for an exemption and how the individual mandate may affect your taxes with this helpful guide from TurboTax.
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 for your 2018 taxes, but won’t impact your 2017 taxes. Learn more about tax reform here.
Beginning in 2019, the penalty for not meeting the requirements of the Individual Mandate will no longer be assessed.
The new health care law applies to individuals of all ages. This means, if you have dependents, you’ll be responsible for making sure they have health insurance coverage, as well.
Unless you have an exemption, you must have a health insurance plan that qualifies as "minimum essential coverage.” Employer and government sponsored plans will qualify, as well as most individual health insurance plans. If you’re unsure whether or not your plan qualifies, check with your provider.
Although the individual mandate affects the majority of Americans, there are some exceptions. For example, members of certain religious ministries and federally recognized Indian tribes are exempt from the individual mandate.
You’re automatically exempt if you don't have to file a federal income tax return because your income is too low. You may also be exempt if you’re experiencing certain life or financial hardships:
- Natural disaster
- Utilities shut off
- Death in the family
- Domestic violence victum
- Medical expenses that you cannot pay
- Unexpected expenses to care for a family member
- Another person is required to give medical support to a child
- Ineligible for Medicaid because your state did not expand it under the ACA
- Your current healthare plan was cancelled and alternative ones are not affordable
- "Other' hardships in obtaining health insurance
If you're not exempt and choose not to have health insurance, you may have to pay a tax penalty at the end of the year for the months you were uninsured.
The penalty amount is based on a percentage of your household income OR a maximum per person or per family rate, whichever is higher, and these rates increase every year.
Still have questions about the individual mandate? Visit TurboTax.com/health to learn more about the Affordable Care Act and how it may affect your taxes.
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