For tax years beginning in 2014, all Americans and legal U.S. residents are required by law to obtain at least a minimum level of health insurance. Well, if you’re employed and you already get insurance from your employer, then there’s nothing you need to worry about. But if you’re self-employed or employed but your employer doesn’t offer such health benefits, you have to buy health insurance. Why? What happens if you don’t meet this requirement?
If you don’t have any health insurance, you will be charged a “tax penalty” when you file your annual tax return. (Visit taxreturn247.com.au for more information regarding of filing of tax return.) The ObamaCare Individual Mandate states that everyone in the U.S. must have health insurance; otherwise they will have to pay a fee, which is also sometimes called as a “shared responsibility payment”. But of course, there also exemptions for certain groups of people. If you’re experiencing financial hardship or your income is below the tax filing threshold, you won’t be charged for any penalty.
How much is the cost of ObamaCare penalty?
There are two ways the government will calculate the amount you will need to pay as a penalty. And whichever is higher, that’s the amount that you will have to pay. For 2014, it’s either 1% of your taxable income or $95 for each adult (and $47.50 for each child) with a maximum total penalty amount of $285 per family. So if, for instance, you earned $25,000 in 2014, your 1% would be $250; therefore, you would be penalized an amount of $250 because that’s more than the $95 fee.
But keep in mind that every year, the amount of penalty increases. In 2015, the fee increases to 2% of your taxable income or $325 per adult (and $162.5 per child) with a maximum penalty of $975 per family. In 2016, it increases again to 2.5% of your taxable income or $695 per adult (and $347.5 per child) with a maximum of $2,085 per family.
How to avoid the penalty?
The simplest way to avoid paying such penalty is by getting qualified health insurance. Examples of qualified health insurance are those which are offered by employers and individual market. But most Medicare, Medicaid plans, and Veterans Affair coverage also count as well. You can also get insurance from a private insurer, but keep in mind that policies with limited benefits, such as dental plans, don’t qualify.
The rule is simple: If you don’t want to pay penalties, then get insured. Not only will this save you thousands of dollars in the long run, but it will also give you and your family a great peace of mind. When you have health insurance, you can guarantee that you and your family will be covered should any of you get injured or sick. It will protect you from paying the full of cost of expensive medical services and other expenses.