How to Avoid the Penalty and Afford Insurance

Beginning in 2019, you will no longer be subject to a penalty for not having insurance. Until then, the cost of breaking the new health care law could be more than you think. If you don't get health insurance, you'll pay a tax penalty when you file your 2018 tax return.

But the cost of getting health insurance may not be as much as you think. This is mostly because there is money available from the government to help people pay their premiums.

Penalty Costs

When you file your taxes, you'll be asked if you had health insurance.

If you didn't, you’ll pay a penalty that is the greater of:

  • $695 for each adult and $347.50 for each child, up to $2,085 per family
  • Or 2.5% of your family's income, up to a maximum of the average annual premium for a bronze level plan

However, you won't have to pay the fine for going without insurance if:

  • You belong to a religion that has religious objections to insurance.
  • Insurance would cost more than 8.05% of your income, even with help from an employer or the tax credits.
  • Your income is so low that you aren't required to file a tax return ($10,000 for an individual; $20,000 for a family).
  • You would have been eligible for Medicaid, but you live in a state that did not expand its program.
  • You live in an area with no marketplace plans or only one insurer selling plans.
  • The only plan available in your area covers abortion and you oppose abortion.

 

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 private insurance 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 $48,000 a year for one person or about $98,000 for a family of four. These income amounts are based on the federal poverty guidelines and will change every year.

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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. A tax credit can help pay for your monthly insurance payments, called the premium. The credit can immediately lower your costs. You don’t have to pay first and get the money later.
  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.

Your state's Marketplace will tell you exactly how much assistance you might receive.

In addition, you may qualify for Medicaid - a low-cost program for people with low incomes. You can enroll in Medicaid through your state Marketplace at any time during the year.

In order to shop for a private insurance plan, you must do so during the open enrollment period (usually in the fall). You must enroll in a plan during that timeframe, or you will have to wait until the next open enrollment period, unless you have special circumstances. You may be eligible for a special enrollment period if you had a qualifying event such as losing your job or other insurance coverage. If you are eligible for Medicaid, you can enroll at any time during the year.

WebMD Medical Reference Reviewed by Sarah Goodell on June 01, 2018

Sources

SOURCES:

Community Catalyst & Georgetown University Health Policy Institute: "Individual Requirement to Purchase Healthcare in the Affordable Care Act," "Standardizing Health Plans," "Federal Subsidies: Helping People Afford Health Care."

FamiliesUSA: "Help is at Hand: New Health Insurance Tax Credits."

Henry J. Kaiser Family Foundation: "The Requirement to Buy Coverage Under the Affordable Care Act."

Jennifer Tolbert, director of state health reform, Henry J. Kaiser Family Foundation.

Centers for Medicare and Medicaid Services: "Fact Sheet: Individual Shared Responsibility for Health Insurance Coverage and Minimum Essential Coverage Proposed Rules."

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