What Is The Penalty For Not Buying Health Insurance?

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   Shane Burt

   President/Senior Insurance Exec., Mid-American Insurance Associates, Olathe, KS

   Starting Jan. 1st, 2014, the tax penalty for not having health insurance is $95 per person for the year, up to 3 persons max per household and where dependents under 21 count as half a person; or 1% of annual income, whichever is greater... So, a family of 4 or more, would only pay a max of $285 in 2014($95 x 2adults= $190, plus 2 children at $47.50=$95, for a total of $285). But, for a single individual non-dependent, they would most likely pay the 1% of income, up to the $285 max(i.e. a single 33yr old with $22,000 annual income would pay 1% or $220 for the year, because $220 is greater than the $95 per person and below the $285 max household). After 2014 the tax penalty increases to $325 in 2015, or 2% of income up to $975 max(3x$325). Followed by $695 in 2016, or 2.5% of income up to $2,085 max(3x$695); and then adjusted to Cost of Living Increases thereafter. Also, the penalty can be prorated. So, if you are only uninsured for 1 month out of the year where a penalty would be applied, you would only pay one month's worth of penalties(i.e. For 2014, if you miss one month you would pay $95/12=$7.92 per person, or 1% of your income/12). And due to the application processes and effective dates for insurance, one day of being uninsured, equals one month. So, be very aware of when you apply for insurance and when it will take effect. It's best to work with an insurance agent or broker, and an accountant, to calculate the exact tax implications for your individual situation; to assure that you are indeed responsible to pay the tax or if you are exempt from it.

   Answered on October 24, 2013

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