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What are the Penalties for Not Having Health Insurance?

On Behalf of | Sep 18, 2014 | Insurance Law

Many workers who have been doing fine without healthcare coverage are wondering what will change now that the Affordable Care Act has been signed into law. What are the penalties for going without coverage? Is it worth it to buy insurance?

Beginning this year, everyone in the U.S. has to have health insurance, with few exceptions. Those who don’t have insurance will get hit with a penalty from the IRS. You can’t go to jail for not having insurance, and your employer or doctor won’t turn you in. You’ll self-report on your tax return in 2015 whether or not you had health insurance last year. If you answer no, then you’ll have to pay a penalty that can range from $95 per adult or $47.50 per child up to 1 percent of your taxable income. In 2015, that penalty will go up substantially to $325 per adult, and in 2016, $695 per adult. The government can’t garnish your wages for this penalty. At worst, it will take it out of your refund.

There is a grace period for going without coverage. If you are without coverage for three months or less, whatever the reason, you will not be penalized for the year.

There are several groups that are exempt from the new healthcare law. They include those who don’t file tax returns, those whose premiums are 8 percent or more of their household income, Native Americans, and those who live in states where they would qualify for Medicaid, but Medicaid was not expanded under the ACA.

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