October is almost over, and after that there are only two months before taxes become top priority. Something I wanted to take time to discuss this month was Obamacare and how it could affect your 2016 taxes.
(Side note: Before we go any further, I just wanted to remind everyone that open enrollment begins November 1st for the 2017 year.)
Now back to the topic at hand!
By now, most of you have health insurance, whether it be through the Marketplace, your work or a private insurance provider. But for those of you who still are avoiding getting it, I just wanted to inform you of the penalties for this year. The penalty is calculated two ways – a percentage of your total household adjusted gross income, or a flat fee. Whichever one is greater is what you will have to pay.
Now, what are the penalties for 2016? It will either be 2.5% of your total household adjusted gross income or $695 per adult and $347.50 per child, to a maximum of $2,085. The simplest way to avoid having to pay these fines is by having health insurance at least 9 months out of the year.
If you don’t have health insurance, it may be because you are exempt from having it. If that is the case, the above penalties don’t apply to you. Curious who is exempt? Check out the list below:
- The most affordable coverage is more than 8% of your household income.
- You were only uninsured for three months or less.
- You are exempt from filing a tax return due to your income being too low.
- You are Native American.
- Your religion objects to the use of insurance.
- You’re in prison.
- You belong to a health-care sharing ministry.
- You have been abroad for more than one year.
- You qualify for a hardship exemption due to an issue such as homelessness, bankruptcy or eviction.
If you believe that you qualify for an exemption, you must apply for it by going to healthcare.gov.
As the years go on, the penalties for not having health insurance are going to continue to rise. It is better to get health coverage and be protected from not only penalties but also have coverage in case of an emergency, rather than paying the penalties each year.
If you have any questions about this, please don’t hesitate to give me a call. I am here to answer any questions you may have!
A Mazzo Accounting provides a variety of tax and accounting services to individuals and businesses in the Wyomissing, Reading, West Reading, Sinking Spring and Kenhorst areas, as well as towns and villages around the Greater Reading area. Our services for small to mid-size businesses include taxes, payroll services, accounting services, and bookkeeping services. We also provide a variety of services for individuals and they include tax return preparation as well as some accounting assistance.
Reference: https://www.nerdwallet.com/blog/health/how-much-is-the-obamacare-penalty-not-having-health-insurance/