How Big is the Penalty if You Don’t Get Health Insurance?

By :: November 6th, 2013

Stories about the Affordable Care Act often tell readers that they’ll have to pay a $95 penalty if they don’t get adequate health insurance coverage. But, like a lot of other things I read about the health law, that’s not quite correct. The penalty (which the Supreme Court said is actually a tax) could be less or, more likely, a lot more. It’s a complicated story.

The basic penalty is $95 in 2014—if you’re unmarried with no dependents and your income is less than $19,500. If your income is higher, you’ll owe more: 1 percent of the amount by which your income exceeds the sum of a single person’s personal exemption and standard deduction in the federal income tax. That’s $10,000 in 2013. But be warned: Income equals adjusted gross income (AGI—that number on the last line on page 1 of your tax return) plus any tax-exempt interest and excluded income earned abroad. If you make $30,000, your penalty will be $200.

Still with me? Good, because it is about to get more confusing.

If you’re married or have kids, you’ll owe a minimum of $95 per person for yourself, your spouse, and each dependent over age 17 plus half that amount for each child under 18. But the total can’t exceed three times the basic $95 tax, or $285. Except it can. If 1 percent of your income (minus your and your spouse’s personal exemptions and standard deduction—$20,000 in 2013—plus those add-ons) is more than $285, that’s what you’ll owe. Oh, and you’ll have to include your dependents’ income in the calculation.

But there’s a cap. Your total penalty can’t exceed the national average premium for a bronze-level health policy for your family’s size. We don’t know what that is yet but it’s surely more than $95. CBO projects that the average bronze premium in 2016 will be between $4,500 and $5,000 for an individual plan and more than $12,000 for families. If your income exceeds $1.2 million next year, that ceiling might apply.

That’s just for 2014. The penalty will grow over time: The dollar minimums will be $325 in 2015 and $695 in 2016 and will grow with inflation after that (rounded down to multiples of $50). By 2023, it will hit a projected $800. And the percentage of income penalty also grows—to 2 percent in 2015 and 2.5 percent after that.

Some people won’t have to pay the tax. Even if you don’t have insurance, you’re safe if you have religious objections to health insurance, are an American Indian, are in jail, or are “not lawfully present” in the U.S., among other reasons. You’re also protected if buying insurance would impose economic hardship. That happens if it would cost more than 8 percent of your income (defined slightly differently of course).

If you owe a penalty, you’re supposed to pay it with your income tax return. But there’s not much the IRS can do if you don’t pay. They can’t put you in jail or garnish your wages. In fact, about the only way the IRS can collect is if you’re due a refund. They can deduct the penalty from this year’s and future refunds.

A well-known radio personality is urging people to avoid the penalty by making sure you won’t get a tax refund. Ignore him. Trying this requires many years of careful planning and is easy to mess up. Besides, most Americans love their refunds.

There is, of course, a simpler way to avoid the penalty: Sign up for health insurance.

29Comments

  1. Ralph H  ::  10:18 am on November 6th, 2013:

    Well, from your simplified explanation I can see where at least a dozen of the thousands of pages in ACA law were devoted to. Sounds like a typical governmentized law with many loopholes, varying penalties and uneven enforcement.

    people need straightforward laws.

  2. Michael Bindner  ::  11:47 am on November 6th, 2013:

    I have an interesting case. My wife and child get health insurance through her job, but I was not added. If I don’t get health insurance (I work a minimum wage job but my wife does not), what will my penalty be? I think I will just get a better job and sign up for Obamacare. More easily said then done. Is TPC hiring?

  3. Jack B  ::  12:23 pm on November 6th, 2013:

    With this much complexity going in to figure your fine (tax) for not being insured, I can see the cost of Turbo Tax going up for 2014.

  4. AMTbuff  ::  2:33 pm on November 6th, 2013:

    This is what happens when the government tries to keep a major income transfer program off-budget.

    I wonder what percent of the total IRS budget will be spent on work related to the health care subsidies and penalty tax.

  5. Pick an Extra Bail of Cotton Slave: Why the ObamaCare Penalty Will Likely Be More Than $95 – Blur Brain  ::  8:25 pm on November 21st, 2013:

    […] as reason to forgo coverage that will cost more than $95 a month.But it’s not that simple, as Roberton Williams of the Tax Policy Center pointed out last week, for a number of reasons.Your penalty will likely be more than $95. In fact, if […]

  6. dental crowns  ::  6:45 pm on January 30th, 2014:

    Superb submit. I’m examining regularly this blog page and i am motivated! Very useful information in particular the ending phase :) I deal with such information and facts considerably. I became searching for the following specified facts for an extended time. Appreciate it and also connected with good luck.

  7. How Big Will Obamacare Penalty Taxes Be? -  ::  9:29 pm on March 6th, 2014:

    […] My TaxVox post last November explained what determines the penalty. For low-income households, it’s a fixed dollar amount: $95 per adult plus $47.50 per child, up to a total of $285. Higher-income families will owe 1 percent of their income (net of specified deductions), up to the average national cost of getting basic (bronze level) insurance coverage for all family members. According to the Urban Institute’s Health Policy Center, that coverage will cost about $3,600 per adult plus $1,900 per child in 2014. […]

  8. How Big Will Obamacare Penalty Taxes Be? | LamboArchie blog  ::  10:48 pm on March 6th, 2014:

    […] My TaxVox post last Nov explained what determines a penalty. For low-income households, it’s a bound dollar amount: $95 per adult and $47.50 per child, adult to a sum of $285. Higher-income families will owe 1 percent of their income (net of specified deductions), adult to a normal inhabitant cost of removing simple (bronze level) word coverage for all family members. According to a Urban Institute’s Health Policy Center, that coverage will cost about $3,600 per adult and $1,900 per child in 2014. […]

  9. A Web Tool to Calculate ACA Tax Penalties  ::  3:01 am on March 9th, 2014:

    […] TaxVox post last November explained what determines the penalty. For low-income households, it’s a fixed […]

  10. jake banner  ::  6:29 pm on March 13th, 2014:

    Is social security included in income?

  11. www.torontocarinsurance.org  ::  7:50 am on May 27th, 2014:

    Thanks for the tips you have discussed here. Moreover, I believe usually there are some factors
    that really keep your car insurance policy premium straight down. One is, to take into account buying vehicles that are inside good listing of car insurance
    organizations. Cars that happen to be expensive will be more
    at risk of being robbed. Aside from that insurance coverage
    is also in line with the value of your vehicle, so the costlier
    it is, then the higher the premium you pay.

    I have seen that car insurance businesses
    know the motors which are at risk from accidents and also other risks.
    Additionally, these people know what types of cars are inclined to higher risk and the higher risk they may have the higher a premium charge.
    Understanding the simple basics of car insurance just might help you choose the
    right form of insurance policy that will take care of your needs in case you happen to be involved in any accident.
    Thank you for sharing the ideas for your blog.
    Thanks alot : ) for your post. I’d really like to say that the
    tariff of car insurance varies from one coverage to another, mainly
    because there are so many different facets which play
    a role in the overall cost. Such as, the brand name of the car or truck
    will have a huge bearing on the fee. A reliable outdated family vehicle will have a lower priced premium when compared to a flashy fancy car.

    Thanks for the distinct tips shared on this website. I have noticed that many insurance firms offer shoppers generous savings
    if they decide to insure more and more cars together. A significant number of households own several autos these days,
    in particular those with elderly teenage children still living at
    home, plus the savings on policies can soon begin. So it will pay to
    look for a good deal.
    One thing I’d like to say is that car insurance canceling is a hated experience
    and if you are doing the best things as being a driver
    you may not get one. Some individuals do have the notice that they are officially dumped by their own insurance company and many have to struggle to get extra insurance after having a cancellation. Affordable auto insurance rates are often hard to
    get after having a cancellation. Knowing
    the main reasons for auto insurance cancelling can help motorists prevent
    sacrificing one of the most crucial privileges readily available.

    Thanks for the concepts shared via your blog.

    Feel free to surf to my blog … Cheap Car Insurance
    Toronto (http://www.torontocarinsurance.org)

  12. eli  ::  1:57 pm on June 17th, 2014:

    I have a question they call my mom stateing that if she didnt get insurance they can canc our insurance ( my brothers and i) Can they actually do that ?

  13. frontlinecommando2hackdownload.blogspot.com  ::  12:08 am on June 22nd, 2014:

    5 Name: Haze Class: Sniper Role: Long-Range Support.
    Moreover, they can just bend over and kiss their own stupid assets, since they obviously
    need to have them kissed so badly, so conceitedly (like, again, the
    petty vermin they’re thereby trying to forget they know they are.
    If you’re a first-timer to Howl – OScream at Busch Gardens Tampa, a tour makes sure you see everything without any planning on your part.

    Feel free to visit my web-site … frontline commando 2 hack (frontlinecommando2hackdownload.blogspot.com)

  14. car finder service  ::  10:16 pm on July 4th, 2014:

    Hello dude ! Much appreciation for old perceptions and even advice , I desire your chunk of the internet . I am absolutely going to be on the watch for any and every of your entire foreseeable future articles and posts . You’ve got the best writing and submitting methods . This became quite an exciting blog post . Uphold the fantastic work .

  15. tinychat.com  ::  9:35 am on July 20th, 2014:

    tinychat.com

    TaxVox » Blog Archive How Big is the Penalty if You Don’t Get Health Insurance? » TaxVox

  16. strona  ::  10:30 am on July 21st, 2014:

    We’ve been a gaggle of volunteers in addition to starting a new system in your neighborhood. Your web site provided us valuable data to be able to works of art upon. You could have conducted an extraordinary occupation along with our whole group will likely be fortunate for you.

  17. Latisha  ::  8:50 pm on August 2nd, 2014:

    I think that everything posted made a lot of
    sense. However, think about this, suppose you were
    to write a killer headline? I ain’t saying your information isn’t solid., however what if you
    added a post title that makes people desire more?
    I mean TaxVox

  18. http://artfulimagesandmore.com  ::  3:49 pm on August 4th, 2014:

    Please let me know if you’re looking for a writer for your site.
    You have some really good articles and I feel I would
    be a good asset. If you ever want to take some of the load off, I’d love to write some content
    for your blog in exchange for a link back to mine.
    Please blast me an email if interested. Kudos!

  19. Tracie  ::  9:21 am on August 10th, 2014:

    Hmm is anyone else encountering problems with the images on this blog loading?
    I’m trying to determine if its a problem on my end or if it’s the blog.

    Any responses would be greatly appreciated.

  20. Meghan  ::  12:33 am on September 5th, 2014:

    Write more, thats all I have to say. Literally, it seems as though you relied on the video to make your point.
    You clearly know what youre talking about, why waste
    your intelligence on just posting videos to your site when you could be giving us something informative to read?

  21. planning calculators  ::  3:39 pm on September 9th, 2014:

    If you are going for most excellent contents like myself,
    just pay a visit this web site daily for the reason that it offers quality contents, thanks

  22. hotmail 365 hogent  ::  10:43 pm on September 24th, 2014:

    However, Hotmail was still one associated with the most widely used services, with
    over 300 million active accounts.

  23. energy company  ::  8:15 am on October 6th, 2014:

    energy company

    TaxVox

  24. malls in philippines  ::  2:45 am on October 10th, 2014:

    It’s really a cool and useful piece of info. I’m glad that you shared this useful info with us. Please keep us informed like this. Thanks for sharing.

  25. Raguel Lawman  ::  2:19 pm on October 31st, 2014:

    click over here now

  26. braces The Woodlands TX  ::  10:10 pm on November 7th, 2014:

    braces The Woodlands TX

    TaxVox

  27. Cartier love bracelet couple white gold  ::  10:04 pm on January 8th, 2015:

    I have a question for some of this blog’s readers. I have been in semi-estrangement, low contact with my family for over four years. Mine is a case of being the family scapegoat since I was six years old, when my parents nearly divorced when my father had an affair with his office assistant at the company he owned. He was forced to take back my mother since she was expecting their fifth child. I am the second born, of a family consisting of 3 daughters followed by two sons. I remember a happy early childhood until my parents reunited. My father didn’t necessarily want to take back his family as he was deeply in love with another woman, his employee. He couldn’t fire her either because she could expose him in the community, though it was actually quite well exposed anyway. He continued to have affairs, not known how many, until he was exposed yet again when he was in his mid-fifties. So many of the stories on this blog are identical to mine. I came to the realization that I had to go in low-contact a few years ago. I had developed some really chronic pain problems (one person talked about it, interstitial cystitis) and being with them and the level of condescending behavior, ridicule, etc. spun me into a flare every time I saw them. In addition, we were all part of a religious community (5,000 of the very lucky chosen ones out of the whole world who would see heaven) and I left that community as well, so in a nutshell, I left my entire world behind, most of my social contacts, etc.
    Cartier love bracelet couple white gold http://cartierlovebraceletcouplewhitegold.weebly.com/

  28. How To Save Money On Car Insurance | Just no sense  ::  4:56 pm on January 21st, 2015:

    […] properties, over 80% are let unfurnished. But, what a letting agent calls unfurnished and what a business insurance toronto company call unfurnished are two entirely separate things. If you have carpets, curtains or any […]

  29. Ivf 2ww Nausea 5dpo | 30 Day IVF  ::  4:07 pm on January 29th, 2015:

    […] rental that starts between 1st April 2014 Car Rent in Turkey from £9. Ebook before 1st March 2014 and 30th September 2012 and thirty first January 2014 and 28th February 2014 and 31st January 2014 for car […]