By Jim Donovan
Tip #2 : Get Insured Or Pay Penalty
The Affordable Care Act, often referred to as Obamacare, requires that beginning in 2014 Americans have health insurance. If you don’t have health insurance you won’t go to jail, but you could be hit with a fine or what is being called a “penalty”.
Here are the minimum penalties for 2014:
Adults without insurance $95
Children without insurance $47.50 per child
Families with multiple kids $285
People without health insurance coverage will pay either the minimum amounts above OR 1% of household income, whichever is greater. That’s the key thing to remember.
For example the minimum penalty for a single adult is $95. But if that person has an income is $30,000. 1% of that is $300. You pay whichever is greater. In this case $300.
Here’s another example. If a family of four isn’t insured, the minimum penalty they’ll pay is $285. But say the household income is $45,000, well 1% of that is $450. Again, they’ll pay the higher of the two, $450, not $285.
Each year these penalties increase.
So in 2015 the minimum penalty will be $325 per adult, $162.50 per child and up to $975 for a family OR 2% of the household income, whichever is greater.
In 2016 the minimum penalty will be $695 per adult, $347.50 per child, or $2,085 for a family OR 2.5% of the household income, whichever is greater.
After 2016 the penalty amounts will be increased annually by the cost of living.
If you’re wondering how the government will get you to pay out these penalties, well they’ll take it out of any tax refund that your owed beginning in 2015.
By the way, income is defined as total income in excess of the filing threshold ($10,000 for an individual and $20,000 for a family in 2013).
The penalty will be also be pro-rated by the number of months without coverage and there is no penalty if you have a single gap in coverage that’s less than 3 months in a year. Finally, the penalty can also not be more than the average premium charged nationally for Bronze coverage in a marketplace.