Health care reform, which is commonly referred to as Obamacare, has caused a lot of worry among both those who have health insurance and those who do not. One of the major concerns of health care reform is that every single American is required to have health insurance otherwise he or she will be penalized. This is not entirely accurate. The requirement for having health insurance does not apply to everyone. The penalty for not having health insurance is a small fine.
There are many exemptions to the health insurance requirement, and therefore being charged with a tax penalty. These exemptions include financial hardship, religious reasons, caring for an ill family member and many more. However, if you believe that you will not get an exemption it is very easy to calculate how much you will be fined for not having coverage.
- First, estimate your household’s modified adjusted GROSS annual income; the amount of money you and your family make BEFORE taxes are taken out. This needs to include any income that you report on your taxes. Only include your family’s income if you file taxes jointly with your spouse and/or claim any dependents (please take note that just because someone lives under the same roof as you does not necessarily mean they are included in your household income).
- Once you have an accurate estimation of how much money you and your family expect to make, throughout the WHOLE year, then you need to multiply that number by .02. This calculates 2% of your annual income. The number that you get from multiplying your annual income by .02 is the maximum amount of money that you can be charged for not having health insurance – your total annual fee. If this amount is below $325 then you must use $325 for your total annual fee.
- Now, divide your total annual fee by twelve. Whatever amount you calculate after dividing by twelve is how much you will be charged for each month that you do not have coverage.
2% is the number for 2015 ONLY; for 2016 the penalty is 2.5%, multiply your income by .025 for 2016.
Submit your questions below or start a conversation in the comments!