How to Calculate Your Individual Insurance Mandate Fee
When the Affordable Care Act (Obamacare) was passed into law in 2012, there was a lot of controversy swirling around the law as a whole. But the most controversial part of the law by far—and one of the only aspects that most Americans can agree is discouraging—is the individual insurance mandate, which states that every tax-paying American either obtain “minimum essential coverage” or pay a penalty for every month they are uncovered. The penalty is due with your tax return.
So, how will you determine how much you owe if you remain insurance-free this year? There are two ways to calculate the penalty: you will either pay a percentage of your household income, or a flat-fee, whichever is higher.
The Fee in 2015
If you don’t have the minimum essential coverage in 2015, you’ll pay the higher of these two amounts:
· 2% of your yearly household income. The maximum penalty is the national average premium for a bronze plan, which is around $2,500.
· $325 per person for the year ($162.50 per child under 18). The maximum penalty per family is $975.
The Fee for Not Having Coverage in 2014
If you did not have health coverage last year, you will pay the higher of these two:
· 1% of your yearly household income.
· $95 per person for the year ($47.50 per child under 18).
The Fee After 2015
The penalty for not having health coverage increases every year. In 2016, the penalty will be 2.5% of your household income, or $695 per person.
How You’ll Pay the Fee
You will pay the penalty on the federal income tax return that you file for the year you don’t have coverage.
If you already owe a lot in taxes, and if you don’t want to be stuck with even more fees on top of what you already owe, see how we can help lower your tax liability at http://www.irsallstar.com/our-services#13