The Affordable Care Act (ACA), also referred to as Obamacare, imposes an individual mandate requiring all non-exempt US Citizens and legal residents to enroll in government-approved health insurance OR pay a penalty. The penalty will be collected through the individual’s income tax returns (Form 1040).
You and each member of your family must have “minimum essential coverage” (basic health insurance coverage), OR qualify for an exemption. If not, you must make an ‘individual shared responsibility payment’ (a/k/a PENALTY!) when you file your federal income tax return.
For 2014, the penalty is $95 per adult and $47.50 per child (up to $285 for a family), or 1 percent of family income, whichever is greater.
For 2015, the penalty is $325 per adult and $162.50 per child (up to $975 for a family) or 2 percent of family income, whichever is greater.
For 2016, the penalty is $695 per adult and $347.50 per child (up to $2,085 for a family) or 2.5 percent of family income, whichever is greater.
However, because the penalty is small in comparison to the cost of health insurance, it is estimated that between 8 and 12 million people will opt to pay the penalty rather than buy insurance.
If you want to know how ACA will impact you and your tax return, contact our office. We’d be glad to help!