With the Affordable Care Act, there are many new healthcare coverage options for millions of citizens previously uninsured. Even though you might decide not to purchase health insurance, it might be a costly decision. Qualified taxpayers who do not have health insurance might be slammed with penalties, although a couple of exceptions exist.
Under the ACA provision, a couple of insurance plans qualify, and it needs to include not less than ten categories. With this, most health insurance needs to provide comprehensive coverage, which made health care more accessible and prevented financial hardship due to illness.
The following must be covered by healthcare plans that any individual plan:
Prescription drugs
Ambulatory patient services
Newborn and maternity care
Emergency services
Hospitalization
Pediatric care, including dental and vision services
Substance use disorder services and mental health
Lab services
Rehabilitative services and devices
Wellness and preventive services
Health Insurance Requirement Exemption
Some exemption provisions allow you to escape the mandatory requirement to hold health insurance. Here are the conditions:
Unaffordable Care: For minimum coverage that will cost above 8% of all household income, you might get an exemption
Exempt From Tax Filing Requirement: For any income below the filing limit, Uncle Sam removes you from the requirement of this coverage
Hardship: Any hardship you experience that does not allow you to get coverage, your exemption might be certified by the Health Insurance Marketplace. This includes people with pre-existing health coverage cancelled by the ACA.
Short coverage gaps: For people whose coverage does not span up to three months, there will not be charges for the uninsured period
Membership of an Exempt Group: tribes of native Americans, immigrants without documentation, and people who cannot have insurance due to religious beliefs are spared from being insured.
For people who are not sure whether they are exempt from the requirement to get health insurance, consider talking to a tax professional to help determine if you qualify to waive the penalty completely and request for an exemption for health care.
Penalties, Assessment and Collection
For people who are eligible for health insurance and do not meet the requirement for exemption for tax years spanning from 2014 to 2018, Uncle Sam will examine the penalty fees using your return if you prefer to stay without coverage. Such a fee is estimated, either as a percentage of the annual household income that qualifies or a flat rate: the higher of these two.
This will be removed from the return, like any other tax and included with any balance you might owe. However, Uncle Sam cannot use any collection action to recover such fees.
Penalty Value
This penalty was classified as 1% of income which equates to $47.50 for every uninsured kid below 18 and doubles this value for uninsured adults in 2014. The following year, the penalty rose to 2% of income value, or $325 for every uninsured adult. In 2016 as well, the rate increased to 2.5% of income, or $695.0 for adults not insured.
The rates were adjusted for inflation from 2016 to 2018. For people not insured for part of the year, such a penalty only covers the months not insured. However, there will not be a penalty for any coverage gap below three months. This is known as the short gap, and everyone only has one short gap every year.
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