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March 27, 2014

Uninsured? Are You Prepared to Pay the Penalty?

The deadline is quickly approaching to sign up for health care insurance using the Affordable Care Act’s (ACA) federal website – March 31, 2014, to be exact.  The ACA made provision for the Internal Revenue Service (IRS) to collect fees for those individuals not insured by their employer, the government, or directly through an independent insurer.  The fee/penalty sounds fairly reasonable for the tax year 2014, $95, per adult or 1% of income, whichever is greater.  However, did you know the penalties increase over the next couple of years?

Year

Per Adult OR Percentage of Family Income

(whichever is greater)

2014

$95/1%

2015

$325/2%

2016 and beyond

$695/2.5%

The penalties are pro-rated if an individual, their spouse, and children* have partial-year coverage.  If they lack coverage for less than three months in the year, they will have no penalty.  The fees for the uninsured were to encourage and motivate individuals to seek health care insurance coverage, but the law does include a provision to exempt some.

Employers need to stay abreast of the new health care law and its provisions, because they are very detailed and being clarified often.  Communicating regularly with employees about the current status of the law will help employees be prepared to meet the requirements on an individual basis as well.

 

*A child’s penalty is one-half of the adult dollar amount, e.g. $95 per adult is $47.50 per child.

Source:  Luhby, Tami.  “Uninsured next year?  Here’s your Obamacare penalty.” See article here.

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