Tax Penalty For No Health Insurance

Health insurance saves you from breaking the bank to pay for your health expenses. Get yourself insured!

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Health insurance is a type of protection that is provided to you by the insurance company to cover your health expenses. No matter how old you are, there is always a reason you end up in a hospital- and this means a chance for the hospital to take up all your cash.

But what if you don’t have health insurance? Of course, one major disadvantage is definitely going to be having to pay for ALL of your health expenses, which is going to cost you all of your savings likewise.

Having no health insurance can also have you penalized by the state. First, let’s sort out the basics.

Health Insurance

Health insurance plans are given out by insurance companies to cover health expenses of the insured. These plans cover medical expenses, hospital visits, treatments and surgeries, and prescriptions. Even the slightest health condition can cost you hundreds of dollars, so it is always better for you to have insurance.

A monthly premium is paid towards keeping the policy alive, and when the time comes, the money is used for the healthcare of the insured.

A typical health insurance plan provides coverage to policyholders, employees and students if they are engaged in any unfortunate incidents. The insurance coverage offers:

  • Medical expenses
  • Hospital visits
  • Treatment for injuries
  • Recovery cost

Are you still Penalized for not having Insurance?

Health insurance was mandatory until the Trump Administration came along- Obamacare was a healthcare initiative that made health insurance mandatory for all people. However, as of 2019, this doesn’t apply anymore.

Affordable Care Act’s Coverage Mandate

Under the ACA, likewise called Obamacare, Americans who were not in any case qualified for an exception were needed to have health care coverage included for themselves and their families. Inability to have least medical coverage set off an expense punishment; simultaneously, the ACA considered the production of a top notch tax reduction to assist Americans with counterbalancing a portion of the expense of getting health care coverage through the medical care commercial center.

While the ACA actually still exists, Americans who decide not to keep up medical coverage for themselves or their relatives in 2019 and past won’t be penalized at tax-time. It’s assessed that more than 4,000,000 Americans will decide not to have medical coverage inclusion this year because of the penalty being eliminated.

Obamacare is still in effect, but there is no more penalty for not having medical coverage anymore.

The punishment for inability to have ACA-agreeable health insurance is equivalent to it would have been under the federal level. It cost a family $695 for each uninsured adult and $347.50 for each uninsured kid or 2.5% of the family unit pay, whichever sum is more prominent.

Tax penalty for no health insurance is the Medicare Levy Surcharge if your annual taxable income is over $90,000 as a single or $180,000 as a couple or family.

Health Insurance Penalty Exemption

As per health insurance penalty exemption, the following data is extracted online, from the official government website of healthcare: HealthcareGov.

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Exemptions for 2019 and beyond

  • For the 2019 plan year, the Shared Responsibility Payment (“mandate,” “penalty”) no longer applies. You don’t need an exemption for 2019 or beyond.
  • If you’re 30 or older and want a “Catastrophic” health plan, see details about exemptions and catastrophic coverage.

Below are health coverage exemptions for the 2018 tax year.

  • You can claim most exemptions when filing your 2018 federal income tax return (which you probably filed in April 2019).
  • In a few cases you need to fill out an application and mail it to the Marketplace. These are marked “application required” below.

From 2014 through 2018, there was a tax penalty for non-compliance. During this time, in any case, numerous Americans had the option to get exemptions from the individual mandate penalty. The exclusions included:

  • Religious exemption.
  • Hardship exemptions- available for a broad range of situations.
  • Affordability exemption.
  • Exception in light of the fact that the individual would have been qualified for Medicaid however wasn’t on the grounds that their state hadn’t extended Medicaid.
  • Exemption on the grounds that the individual chipped in through AmeriCorps, VISTA, or the National Civilian Community Corps, with a transient arrangement through the volunteer association.
  • Exemption for a short gap in coverage.

Those are only a couple of the exclusions that were accessible. Also, during the years that the penalty applied, a huge number of uninsured individuals didn’t need to take care of the penalty since they qualified for exceptions. In 2018, the federal government made it easier for people to obtain hardship exemptions, likely increasing the number of people who qualified for exemptions when they filed their 2018 tax returns.

What States require Health Insurance?

While the government no longer expects you to have health care coverage, there are a modest bunch of states that have mandates on the books regarding coverage of health insurance.

California individual mandate

  • Effective date: January 1, 2020
  • Requires individuals and their dependents have ACA-compliant health insurance
  • Imposes a tax penalty on Californians who go without health insurance but can afford it
  • Provides state subsidies to help lower income residents afford health insurance

Tax Penalty for No Health Insurance 2020 California

A new California law that went into effect on Wednesday resuscitates the requirement that people obtain health coverage or face tax penalties. An adult who is uninsured in 2020 could be hit with a state tax charge of $695 or 2.5% of his or her gross income. A family of four could pay a penalty of at least $2,085.

Effective January 1, 2020, a new state law requires California residents to maintain qualifying health insurance throughout the year. This requirement applies to each resident, their spouse or domestic partner, and their dependents.

Massachusetts individual mandate

  • Effective date: January 1, 2006
  • Requires individuals have ACA-compliant health insurance
  • Imposes a penalty on state residents who go without health insurance but can afford it
  • Provides state subsidies to help lower-income residents afford health insurance

Massachusetts Health Insurance Penalty 2020

If you enroll in a plan that does not meet MCC standards, you could be subject to a tax penalty under Massachusetts state law. In 2020, these penalties can be up to $135/month or $1,620/year for an individual. This is why it is important to understand whether a plan meets MCC standards before you enroll.

You can go up to 3 consecutive months without penalty, and multiple lapses are allowed within 1 calendar year. To avoid a state tax penalty, adults 18 or older must have what Massachusetts considers ‘minimum creditable coverage (MCC)’ or prove eligibility for an exemption.

New Jersey individual mandate

  • Effective date: January 1, 2019
  • Requires individuals and their dependents have ACA-compliant health insurance
  • Imposes a penalty on New Jersey residents who go without health insurance but can afford it
  • Provides state subsidies to help lower income residents afford health insurance

Washington D.C. individual mandate

  • Effective date: January 1, 2019
  • Requires individuals and their dependents have ACA-compliant health insurance
  • Imposes a penalty on residents who go without health insurance but can afford it
  • Provides exemptions to the tax penalty for circumstances such as financial hardship, pregnancy, or eviction

Rhode Island Individual Mandate

  • Effective date: January 1, 2020
  • Requires individuals and their dependents have ACA-compliant health insurance
  • Imposes a penalty on residents who go without health insurance but can afford it
  • Provides state subsidies to help lower income residents afford health insurance

Health Insurance Penalty Calculator

The Individual Mandate Penalty Calculator assesses your penalty for being uninsured versus the amount you would pay for health care coverage inclusion on the Marketplace. With this calculator, you can enter your income, age, and family size to estimate your household’s individual mandate penalty, any financial assistance you may qualify for including Medicaid and premium subsidies, and how much you would pay for the lowest-cost Marketplace plan in your area.

The Individual Mandate Penalty Calculator is based on the Affordable Care Act (ACA) as signed into law in 2010, and subsequent regulations issued by Health and Human Services (HHS) and the Internal Revenue Service (IRS).

Conclusion

Having health insurance was mandatory for everyone before the Trump Administration came into effect. Before that, under Obamacare started by former President Barack Obama, health insurance was mandatory.

Now, even though Obamacare is still in effect, other than a few states (that have their own individual mandate), health insurance is not mandatory, thus after 2019 there has been no penalty for not having health insurance.

Before that there was a tax penalty on the federal level, and apart from some exemptions on cases, most people had health insurance. And not only because it was mandatory, but also because health care was extremely expensive.

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Tony Bennett

Tony Bennett

Tony Benett makes his living in the insurance industry by teaching and consulting. He is also recognized by the legal profession as an expert on insurance coverages. His insurance experience includes having worked at the company level, owned an independent general agency and having worked for an insurance association. He has received various certificates over the past few years and helps his clients and readers by giving them a realistic outlook on what they can expect to achieve within their set targets. At Insurance Noon, he is known for his in-depth analysis and attention to details with accuracy. He has been published as one of the most referred agents by his peers in the insurance community. Tony loves the outdoors and most sport events. His passion other than providing excellent advice is playing golf.

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