What Will Happen if I Don’t Buy Health Insurance?

By on September 4th, 2013

The Affordable Care Act (ACA) requires most Americans to have health coverage. If you’re one of the people who’s required to buy insurance and you don’t buy it, you’ll pay a fine called the “individual shared responsibility payment” when you file your 2014 taxes.

Some people are exempt from the mandate. If you’re not exempt, you must get insurance or pay the fine.

When the penalty happens

Right now, you’re making a decision about whether you should have health insurance starting in January 2014. If you’re supposed to buy insurance and you don’t do it, you’ll have to pay the fine.

The penalty will happen in April 2015, when you’re submitting your 2014 tax return.

When you file your tax return, you’ll be telling the government how much money you earned. They’ll use this information to calculate whether or not you were supposed to buy health insurance.

If they determine you’re someone who should have purchased health insurance and didn’t, you’ll have to pay a fine.

If you’re getting a tax refund, the fine will be deducted from the money the government was going to pay you.

If you owe money to the government, you’ll owe more.

How much you’ll owe

The penalty will go up between 2014 and 2016.

Here are the numbers. You’ll pay either a fixed fee OR a percentage of your income, whichever is greater.

2014

Either a Fixed Fee… Or a Percentage of Your Income
  • For each adult in your household, you’ll pay $95
  • For each child in your household, you’ll pay $47.50
  • Not more than $285 for the whole family
  • 1.0% of your household income above the 2014 filing threshold ($10,150 for an individual and $20,300 for a family in 2014)

2015

Either a Fixed Fee… Or a Percentage of Your Income
  • For each adult in your household, you’ll pay $325
  • For each child in your household, you’ll pay $162.50
  • Not more than $975 for the whole family
  • 2.0% of your household income above the 2015 filing threshold

2016

Either a Fixed Fee… Or a Percentage of Your Income
  • For each adult in your household, you’ll pay $695
  • For each child in your household, you’ll pay $347.50
  • Not more than $2,085 for the whole family
  • 2.5% of your household income above the 2016 filing threshold

After 2016

Either a Fixed Fee… Or a Percentage of Your Income
  • For each adult in your household, you’ll pay $695 plus an amount based on the annual increase in the cost of living
  • For each child in your household, you’ll pay $347.50 plus an amount based on the annual increase in the cost of living
  • Not more than $2,085 for the whole family plus an amount based on the annual increase in the cost of living
  • 2.5% of your household income above the filing threshold for the tax year

Keep in mind

If you have coverage for only some of the year, the amount of the fine is pro-rated based on the number of months without coverage. (And if you don’t have a single gap in coverage of three months or more, you won’t have a penalty at all.)

Also, there’s a cap on the penalty. The penalty will never be more than the national average premium for a bronze plan purchased through an online marketplace. In other words, your penalty most likely won’t cost you more than it would’ve cost you to buy insurance in the first place. For 2014, the highest the penalty for an individual can be is $2,448 and for a family the highest the penalty can be is $12,240.

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