Everyone is required to have health insurance coverage or else they have to pay a tax penalty unless they qualify for an exemption.
The penalty for not having minimum essential coverage is either a flat amount, or a percentage of household income, whichever is greater. The penalty has been phased in and will be adjusted in the future for inflation.
For 2017 and 2018, the penalty is the greater of
- $695 for each adult and $347.50 for each child, up to $2,085 per family, or
- 2.5% of family income above the federal tax filing threshold, which is $10,400 for a single filer, $20,800 for people who file jointly in 2017
In later years, the flat penalty amounts will be indexed based on the cost of living.
In all years, the penalty is also capped at an amount equal to the national average bronze health plan premium available through the Marketplace. For 2017, that amount was $3,264 for a single individual ($16,320 for a family of five or more). This amount is updated annually in the instructions for IRS Form 8965.
The penalty is assessed based on “coverage months.” This means that each month you are uninsured, you may owe 1/12th of the annual penalty. However, short spells of uninsurance may not be subject to a penalty.
Avoid this penalty and shop around for coverage during Open Enrollment 2018.
Contact Cosmo Insurance and we'll help you navigate the health insurance marketplace.