ACA Health Insurance Penalty: What You Need to Know
As mandated by the Affordable Care Act (ACA), individuals who do not maintain health insurance throughout the year may be subject to a penalty at tax time. This penalty is known as the individual mandate, and it is assessed on a sliding scale based on your income, filing status, and the number of months you’re uninsured.
Calculating the Penalty
The ACA penalty is calculated based on the following formula:
– 2.5% of your household income
– Or a flat fee of $695 per adult (up to a maximum of $2,085 per family)
Whichever amount is higher will be assessed as the penalty. This penalty is paid in addition to any other taxes you may owe.
How to Avoid the Penalty
There are several ways to avoid the ACA health insurance penalty:
– Have health insurance coverage for every month of the year. This includes employer-sponsored plans, individual health plans, Medicare, Medicaid, and CHIP.
– Qualify for an exemption. There are a number of exemptions that can exempt you from the penalty, such as:
– Low income
– Hardship
– Unaffordability of coverage
– Religious beliefs
– File for a hardship waiver. If you meet certain criteria, you can file for a hardship waiver from the penalty. This waiver is available to those who have experienced certain life events, such as:
– Loss of income
– Job loss
– Medical expenses
Consequences of Not Filing
If you do not file your taxes or do not pay the ACA health insurance penalty, you may be subject to additional penalties and fees. These include:
– Interest charges on the penalty
– A lien on your property
– Wage garnishment
If you have any questions about the ACA health insurance penalty, it is important to speak with a licensed insurance agent or tax professional. They can help you determine if your situation qualifies for an exemption or hardship waiver and assist you in filing your taxes.
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