IRS Health Care Tax

Starting January 2014, you must either have health insurance coverage throughout the year, qualify for an exemption from coverage, or make a payment Obamacare Tax Penaltywhen you file your 2014 federal income tax return.

Qualifying coverage includes coverage provided by your employer, health insurance you purchase in the Health Insurance Marketplace (“Exchange”), most government-sponsored coverage, and coverage you purchase directly from an insurance company. Qualifying coverage does not include coverage that may provide limited benefits, such as coverage only for vision care or dental care, workers’ compensation, short-term medical, supplemental insurance, coverage for foreigners not residing in the United States, or coverage that only covers a specific disease or condition.

You may be exempt from the requirement to maintain qualified coverage if you:

  • Have no affordable coverage options because the lowest-priced coverage available to you would cost more than 8% of your household income, or
  • Have a gap in coverage for less than 3 consecutive months, or
  • Qualify for an exemption for one of several other reasons, including having a hardship that prevents you from obtaining coverage, or belonging to a group explicitly exempt from the requirement.

If you (or any of your dependents) do not maintain coverage and do not qualify for an exemption, you will need to make an individual shared responsibility (penalty) payment with your tax return. In general, the payment amount is either a percentage of your income or a flat dollar amount, whichever is greater. You will owe 1/12th of the annual payment for each month you (or your dependents) do not have coverage and are not exempt. The annual payment amount for 2017 is the greater of:

  • 2.5% of your household income that is above the tax return threshold for your filing status (Maximum is total yearly premium for the national average price of a Bronze plan sold through the Marketplace) or
  • Your family’s flat dollar amount, which is $695 per adult and $347.50 per child under 18, limited to a maximum of $2,085.

Find out more about the individual shared responsibility provisions at www.IRS.gov/aca. For more information about your coverage options, financial assistance and the Marketplace, visit HealthCare.,gov.