Confused about how much your tax penalty will be?
The amount you'll pay as a fine might be confusing, but one thing is for certain: if you don't have health coverage in 2014, you'll also pay for 100% of your health care costs this year, in addition to the fine. And it'll be a lot more expensive, especially if you experience a medical emergency.
Not only will you face a large amount of medical debt, when a medical bill goes unpaid everyone else ends up paying the price. That's why the health care law requires all people who can afford it to take responsibility for their own health insurance by getting coverage or paying a fee.
Your best bet is to contact me today so we can get you signed up for coverage in time for the February 15 deadline.
Now, here's the real deal on penalties, from the horse's mouth (aka the Covered California website):
The penalty in 2014 is calculated one of 2 ways. If you or your dependents don't have insurance that qualifies as minimum essential coverage, you'll pay whichever of these amounts is higher:
1% of your yearly household income. (Only the amount of income above the tax filing threshold, $10,150 for an individual, is used to calculate the penalty.) The maximum penalty is the national average premium for a bronze plan.
$95 per person for the year ($47.50 per child under 18). The maximum penalty per family using this method is $285.
The way the penalty is calculat ed, a single adult with household income below $19,650 would pay the $95 flat rate. A single adult with household income above $19,650 would pay an amount based on the 1% rate. (If income is below $10,150, no penalty is owed.)
The penalty increases every year. In 2015 it's 2% of income or $325 per person. In 2016 and later years it's 2.5% of income or $695 per person. After that it's adjusted for inflation.
If you're uninsured for just part of the year, 1/12 of the yearly penalty applies to each month you're uninsured. If you're uninsured for less than 3 consecutive months, you don't have to make a payment.
You'll pay the fee on your 2014 federal income tax return. Most people will file this return in 2015.
