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Health Care Reform:

Health Insurance & Affordable Care Act

How to Avoid the Penalty and Afford Insurance

The cost of breaking the new health care law could be more than you think. If you don't get insurance coverage for 2014 as the law requires, you'll pay as a tax penalty in 2015. The good news is that the cost of getting insurance coverage may not be as much as you think. That's mostly because there is money available from the government to help even people who make pretty good amounts in a year.

Penalty Costs

When you're filing your 2014 taxes in April 2015, you'll be asked if you had insurance coverage.

If you didn't and you are the only person you had to cover, you'll pay either $95 or 1% of your gross income, whichever is higher.

If you didn't and you had to cover other adults or children, you'll have to pay $95 for adults and $47.50 for children, up to $285. If that amount is less than 1% of your income for 2014, though, you'll owe 1% of your income.

How Insurance Can Be More Affordable

If paying for insurance is a struggle for you, you may be able to get help from the government. This money is called a subsidy. To get it:

  1. You must enroll in a plan through your state's Marketplace.
  2. The amount you make each year must meet certain rules. The good news is that some financial support may be available even if you are in a middle-income range.

For instance, you'll likely be able to get money if you make up to about $46,000 a year for one person or about $94,000 for a family of four. These income amounts are based on 2013 poverty guidelines and will change every year.

How much financial help you get depends on how much money you make a year. The less you make, the more help you get.

There are two subsidies available. They immediately lower your costs. You don’t have to pay first and get the money later.

  1. Tax credit. This money can help pay for your monthly insurance payments, called the premium.
  2. Cost-sharing subsidy. If you qualify, you will pay less when you get health care or buy medicine because your deductibles, copays, and coinsurance will be lower.

You can get an estimate of the maximum amount you'll have to pay each month for a mid-level plan from the WebMD Health Insurance Cost Calculator. When you're ready to sign up for a plan, you'll see the exact amount you can get on your state's Marketplace.

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