Beginning on 1/1/2014, the Healthcare Reform Act (PPACA), mandates that all individuals have health insurance. Note that this means medical insurance, and does not include dental, vision, life, or disability insurance.
Individuals can obtain health insurance in the following ways:
- If full time over 30 hours per week, through an employer’s group health plan, if one is available.
- Through the individual health insurance plan market
- Through Medicaid if the individual is at 133–400% of the Federal Poverty Level, and the state of residence has expanded Medicaid.
- Through the State Insurance Exchange Program.
If an individual does not obtain health insurance beginning in 2014, he can either:
- Request a waiver if religion is a factor in obtaining coverage.
- Pay the required tax penalty upon filing an annual income tax return.
The penalty for failure to obtain coverage is calculated on annual income.
- For those making less than $9500 per person, or $19,000 per couple, no tax return is filed, so no penalty is assessed.
- In the year of 2014 only, the penalty will only be $95 per person for those making above the tax return minimum income.
- For all years thereafter, the penalty will be calculated at 2.5% of total income for those making above the tax return minimum income.
- The penalty cannot exceed the cost of a “Bronze” insurance plan purchased through a state exchange. A “Bronze” plan is the one of the lowest level plans, offering 60% coverage by insurance, with the individual paying 40% of costs.
For example, a person filing individually with an income of $60,000, the penalty will be $1500.
Keep in mind, that the tax is imposed on total ADJUSTED GROSS HOUSEHOLD INCOME, so, individuals need to look at the whole picture of their taxation status.
