The federal health care law known as the Affordable Care Act requires all Americans to have health insurance. For tax years before 2019, if you don't have health insurance, you must get an exemption from the requirement to buy coverage, or wind up paying a tax penalty. The law says citizens, employers and government share the responsibility of keeping everyone covered, so the penalty for going without insurance has been dubbed the "shared responsibility payment."
Under the Affordable Care Act (ACA), you and your dependents must be covered by a health insurance policy that provides "minimum essential coverage." Health insurance you get from an employer provides this level of coverage, as do government health insurance programs such as Medicaid and Medicare. Any policy you buy through the online marketplaces set up under the ACA also gets you minimum essential coverage. A health insurance provider can tell you whether a policy offers minimum essential coverage.
The ACA provides several exceptions to the coverage requirement. Through 2-18, if you have an exemption, you don't have to pay the shared responsibility penalty even if you don't buy health insurance. Beginning in 2019, there is no longer a penalty for not having health insurance. Take a look at the following list. If any of these apply to you, you may be exempt:
- Your income is so low that you aren't required to file a tax return. For example, single taxpayers in 2017 don’t have to file if their income is $10,400 or less; for married couples, it’s $20,800. This amount can change each year.
- You can't find affordable insurance. The law defines affordable as a policy that costs no more than 8 percent of your income.
- You have a gap in coverage for less than three months
- You're a member of an Indian tribe recognized by the federal government
- You take part in a health care sharing ministry. This is a religious-based group whose members pledge to pay one another's medical bills.
- You belong to a recognized religious group with faith-based objections to all forms of health insurance -- not just Obamacare
- You are an inmate or are in the country illegally
- You apply for and receive a hardship exemption, such as for homelessness, bankruptcy or natural disaster
Making the payment
If you're required to make a shared responsibility payment, the amount you'll pay depends on several factors:
- How many people in your household went uninsured during the year
- Whether the uninsured people were adults or children
- How long they were uninsured.
- Your household income
You start by calculating your "full" shared responsibility payment -- how much you'd owe if you were uninsured all year. You then adjust that full payment according to how long you were without insurance. For example, if your full shared responsibility payment was $480 and you were uninsured for half the year, you would pay half of that $480, or $240. In most cases, you'll calculate and make your shared responsibility payment when you file your income tax return.
Calculating the payment
The shared responsibility payment is being implemented gradually over a number of years:
- For 2014, the full payment is $95 for each adult, $47.50 for each child, up to a maximum of $285 -- or 1% of your household income, whichever is higher
- For 2015, the full payment is $325 for each adult, $162.50 for each child, up to a maximum of $975 -- or 2% of your household income, whichever is higher
- For 2016 and 2017, the full payment is $695 per person, $347.50 for each child, up to a maximum of $2,085 -- or 2.5% of your household income, whichever is higher
From 2016 through 2018, the household income percentage remains at 2.5%; the per-person amounts and the household maximum will rise with inflation. After 2018, there is no longer a penalty for not having health insurance.
Get every deduction
TurboTax Deluxe searches more than 350 tax deductions and credits so you get your maximum refund, guaranteed.