ObamaCare ACA Tax Penalty for 2015 & 2016

Oct 6, 2015

  1. AllenChicago
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    October 6, 2015

    Under the Affordable Care Act, most Americans are required to minimum essential coverage health insurance. When you file your taxes in April, you'll have to report whether or not you enrolled by the deadline.

    To avoid a tax penalty for 2015, the enrollment deadline for most people was February 15, 2015. For 2016, you must get covered by January 31, 2016.

    If you don't get "minimum essential coverage" and you don't qualify for an exemption, you'll have to pay a penalty when you file your tax return. The official name for this penalty is the "individual shared responsibility payment".

    Calculating the Obamacare Tax Penalty

    For 2015, the penalty for going without health insurance is $325 per adult plus $162.50 per child (up to a maximum of $975 per family) or 2% of annual household income, whichever is greater. You'll make this payment when you file your taxes in April 2016.

    For 2016, the fee will jump to $695 per adult plus $347.50 per child (with a maximum of $2,085) or 2.5% of family income, whichever is greater. The fee will continue to increase each year until you get coverage.

    For purposes of determining the penalty, "income" is defined as what your household earns in excess of the income-tax filing threshold. For 2015, the threshold is $10,300 for an individual and $20,600 for married couples filing jointly.

    For Complete Information, Visit: Individual Shared Responsibility Provision

    ac
     
  2. SamIam
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    I thought they capped the fee at 2.5%?
     
    SamIam, Oct 6, 2015
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  3. Yagents
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    Plus inflation factor in future years. Based on timing of China's put options.
     
    Yagents, Oct 6, 2015
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  4. SamIam
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    Are they going after people with this penalty because I don't hear stories about people getting fined. You would think their would be stories out there. Just saying.
     
    SamIam, Oct 6, 2015
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  5. Tkruger
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    The fine occurs during the tax preparation and filing process. It's entirely possible that they were due a refund and it was simply taken from that.
     
    Tkruger, Oct 6, 2015
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  6. AllenChicago
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    Once you answer "NO" to the Form 1040/1040A question about whether you have/had Minimum Essential Coverage the entire tax year, you're then steered to this ([B]http://www.irs.gov/pub/irs-pdf/i8965.pdf[/B]) mind-boggling form, where you're pretty much trapped into making the Tax Penalty payment..one way or the other.

    The only way around it is to lie and say "YES", you had Minimum Essential Coverage the entire tax year. But that opens you up to really severe penalties for lying, when you're eventually caught by the IRS.
     
  7. Yagents
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    Last year, the yes/no box was the honor system.

    This year, carriers are sending 1095B's to IRS / customer showing proof of coverage (creditable), no more honor system. This is why all the carriers are asking for client's SSN #'s.

    I've spoken to many people that paid the penalty last year. Others that should have that didn't (STM), and many more that have no clue how taxes spill down anyways. Did you pay the penalty? Huh? His name is typically Joe
     
    Yagents, Oct 6, 2015
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  8. pplhelper
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    Great info Allen, thanks for clearing that up.
     
  9. KennyWest
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    And who believes the IRS is looking for these sort of cheats?
     
  10. Ann H
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    Generally, it's easiest for the IRS to find a cheat when it's simply a computer comparison between 2 sources of information. So, for instance, if you say "yes, I had minimum essential coverage", but there is no form from the employer or carrier confirming that you did, then it's a red flag.
     
    Ann H, Oct 11, 2015
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