If you don’t sign up for health care by February 15th of 2015, you may be subject to a fee for not having health insurance. While that’s certainly old news to some, 2015 will mark the first time that Obamacare and affordable care act fines are to be collected by the IRA. This tax season will be the first time that individual taxpayers will be required to report their insurance status to the IRS, and while the fines last year were modest, the fines uninsured taxpayers will face this year are much higher – and could continue to rise.
In 2014, the fines imposed were small and manageable for most individuals – $95 or 1% of income, whichever is higher – but in 2015, that number will skyrocket to $325 or 2% of income – again, whichever is higher. Based on this trend and data obtained from the government’s own records, 2016’s fine will be, on average, over $1,000.
Originally imposed to encourage healthy people to get health insurance and lower universal premiums, these fees have always been the most unpopular aspect of the Obamacare healthcare reform despite their good intentions. Healthy people simply don’t want health insurance, it seems, and with fines on the rise in 2015 and possibly 2016, the law will likely face a new wave of criticisms and attacks from a largely Republican Congress. The fact remains that tens of millions of taxpayers are uninsured, but that doesn’t mean that tens of millions of people will be fined.
In fact, a large majority of taxpayers will likely be able to completely avoid these fines thanks to a long list of exemptions that may be applied when taxpayers fill out their tax forms this year. The law itself offers about 30 different exemptions, each created to avoid fining taxpayers who simply can’t afford the loss. Most of these exemptions will be applied to families undergoing financial hardships, and it’s yet to be seen how aggressively and effectively the IRS will enforce this fine.
H&R Block, the very same pillar of the tax industry that many of us use every year, has said that, based on a congressional analysis, only 4 million of the estimated 30 million uninsured taxpayers will actually be required to pay the fee. The other 26 million will be protected by one of the many exemptions included in the law.
There are many tools online that taxpayers can do to figure out if they’re exempt from the fine and, if they are, which exemption applies to them and how to file for it. One such tool is being provided by TurboTax. The free online tool, fittingly named “Exemption Check”, will allow individuals to see if they qualify for any of the exemptions. Curious taxpayers can also use the Tax Policy Center’s Affordable Care Act penalty calculator, another free online tool.
To avoid these fees completely, register for health care under the new health law by February 15th. Mark your calendar, set an alarm, and make sure that you sign up before February 15th, because after that, open registration will be closed and registration will be available only in special cases.
How do you feel about the heathcare reform? Do you have any advice for people new to these laws? Share your insight in the comments section below!