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What Happens If I Don’t Have Coverage in 2015?

So here we are- more than half way through 2014. It has been a big year in healthcare, with several aspects of the Affordable Care Act taking effect, including the Individual Mandate. This mandate means that everyone is required to have health insurance (with a few exceptions).

So what does this mean if you didn’t sign up for health coverage before the March 31, 2014 deadline? Just because you didn’t use the marketplaces to sign up for health insurance doesn’t mean you’re out of options. You can use a private broker or receive insurance through your employer too. However, you must be covered.

Penalties for Being Uninsured

If you spent more than 3 months uninsured in 2014, here’s what you can expect:

There Is a Tax Penalty for Uninsured Individuals

If you did not maintain health coverage in 2014, you’ll pay a penalty on your 2014 tax return. This is called a “shared responsibility payment.”

The amount you will pay will depend on your income:

  1. You’ll be charged 1% of your family income or

  2. $95 for each adult and $47.50 for each child in your household, up to $285 per family.

Whichever of these amounts is more will be the one you’ll be expected to pay. So, for example, a single woman has a gross income of $36,000 in 2014, will have a penalty of $360. This is 1% of her income which more than the $95 penalty.

Please note, the individual mandate does allow for a coverage gap. This means that if you did not have insurance for three consecutive months or less, you will not be penalized. So if you switched jobs and spent two months without health insurance, you won’t be charged the above penalties.

If you had multiple coverage gaps during the year, you’ll need to apply for an exemption. We’ll talk about those in a little bit.

Are There Any Exceptions?

There are a few exceptions to the Individual Mandate:

  1. You can’t afford coverage. This means that if the lowest cost bronze plan available to you through your Marketplace costs more than 8% of your household income.

  2. You’re not a U.S. citizen or national.

  3. You had coverage but there was a coverage gap of less than 3 consecutive months in 2014.

  4. You’re a member of a recognized religious institution that has objections to health insurance.

  5. You’re a member of a federally recognized Native American tribe.

  6. You’re in jail.

There is also a hardship exemption. This exemption is for individuals who have experienced significantly difficult financial or domestic circumstances in 2014. Check out healthcare.gov’s comprehensive list and instructions on filing for an exemption.

What’s Next?

The Individual Mandate is not going away. In fact, the penalties for being uninsured are set to incrementally increase in the next few years.

Penalties In 2015:

  1. $325 for each adult and $162.50, a maximum of $975 per family or

  2. 2% of family income

(Remember: Whichever is more expensive of the two.)

Penalties in 2016:

  1. $695 per adult and $347.50 per child, with a maximum of $2,085 per family or

  2. 2.5% of total family income

(Again, whichever is the greater amount.)

There are several ways to register health insurance for 2015 and avoid any further penalties. You can get insurance through your employer, a parent if you’re under 26 years old, an insurance broker or purchase your own on a private or public health insurance exchange.

Read more about healthcare exchanges.

Have More Questions? We Can Help!

The new legislation can be confusing. We’re here to help! Comment below with any questions we can assist you with.

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