Due to the affordable Care Act, everyone in the United States is now required to have some form of health insurance, regardless of age. If this requirement is not met for more than three months, individuals could be forced to pay fines on their income taxes. Learn more about the requirements and penalties below.
- Feb. 15, 2015 is the last day individuals and families can purchase health insurance through the online marketplace and receive the tax benefit to reduce their premiums. After that date, insurance may still be purchased through individual providers but at the normal, unsubsidized rates.
- Everyone who purchased health insurance through Cover Oregon or HealthCare.gov in 2014 must reapply for 2015.
- Students between the ages of 18 and 26 are only covered under their parents’ insurance if they claim you as a dependent on their income taxes. Otherwise, students must purchase their own health insurance.
- Individuals who are insured through their employer do not need to purchase additional coverage.
- Parents are required by law to provide insurance for their children under the age of 18 by way of their own insurance, Medicaid or the Children’s Health Insurance Program. If a parent does not provide health insurance for their children, they will be forced to pay tax penalties for each uninsured child.
- Individuals making less than $16,105 (or families making less than $32,913) per year qualify for Oregon’s Medicaid program, called the Oregon Health Plan, which provides healthcare for free or at reduced costs for those who qualify.
- This year, only those who qualify for the Oregon Health Plan will apply or renew through the Cover Oregon website. Everyone else will be directed to the national HealthCare.gov website to purchase their health insurance plan.
- Through the HealthCare.gov website, individuals making less than $29,175 (or $59,625 for a family of four) per year may qualify for lower monthly premiums and plans that offer lower out-of-pocket expenses for coinsurance, copays and deductibles.
- Individuals making between $29,175 and $46,680 (or families making between $59,625 and $95,400) per year may only qualify for reduced monthly premiums.
Tax penalties for the uninsured:
- Any adult who was not insured in 2014 will be responsible for paying an “individual shared responsibility payment,” which is essentially a tax penalty. Individuals who were insured for part of the year will pay a pro-rated penalty unless they qualify for an exemption (illegal immigrants, those with very low income, tribal members, those who were incarcerated or are exempt for religious purposes).
- There are two ways individual adults will be penalized, depending on income: a flat fee of $95 or 1 percent of their excess income (essentially everything after the first $10,150 earned for individuals and $20,300 for a couple filing jointly), whichever is higher.
- Additional penalties apply for each uninsured child in the household.
- The flat fee generally only applies to those who make less than $19,650 per year. For 2014, the flat fee is capped at $285 per household, regardless of the number of uninsured persons in the household.
- For individuals making more than $19,650 per year, the 1 percent income tax penalty will apply. For example, an uninsured individual who made $25,000 in 2014 will pay a $148.50 penalty on their tax return (25,000 – 10,150 x .01 = 148.50). The income-based penalty is capped at the yearly cost of the lowest-priced bronze plan available. In 2014, the lowest price plan available was $2,448 for individuals and $12,240 for a family of 5.
- In 2015, the tax penalty for those who remain uninsured for the entire year will increase to a flat fee of $325 per adult or 2 percent of their excess income.
- In 2016, the tax penalty will increase to a minimum of $695 or 2.5 percent of excess income.
- Paying tax penalties is not the same thing as paying for insurance. Individuals must purchase their own health insurance in addition to any penalties to avoid future penalties.
Sources: HelathCare.gov and OregonLive.com
Kelli Pangle | The Broadside