How Much Will A Lack Of Health Insurance Cost You On Your Taxes?
Posted by: Brookside Admin
The Affordable Care Act's second open enrollment period recently ended on February 15th. Except for a few individuals who were granted extensions due to technical issues, this means that those who are still without insurance are facing penalties on their taxes. At Brown Kinion and Company, we can help you correctly file whether you are enrolled in the ACA or need to explore hardship exemption claims. Margot Sanger-Katz of the New York Times explained some of the penalties Americans will be facing this year and for years to come if they fail to obtain adequate health insurance coverage. Here's what you need to know.
The penalty that's been widely publicized for those with no current health insurance coverage is only $95, but that figure is actually only one option. The actual penalty is $95 or 1-percent of the filer's income, whichever is higher. This will particularly become a concern for married couples who are filing jointly without insurance.
That fine increases with every passing year an individual fails to obtain insurance also. So, when they file their taxes next year, they'll be facing a fine equal to 2-percent of their income.
This raises questions about why the enrollment period ends in February when taxes aren't due until April. For those that miss the February deadline to enroll in the ACA, there's no option but to accept an additional fine on this year's taxes. Since many individuals don't know about this fine until they go to file their taxes, it seems like an odd system.
Strengthening the case that the enrollment period should extend into the spring is that the current period runs through the holidays, which are typically a time of financial stress, especially for low-income families who would be good candidates for federally subsidized insurance. It's difficult to ask them to take on additional costs at a time they have an annual low in available funds.
For those who have no alternative but to by-pass enrollment because of financial limitations, there are options available. Hardship exemptions exist for certain circumstances. For example, if you can prove that you had to make a choice between paying electricity bills or getting health insurance, you may be able to escape an additional fine on your taxes. These cases should be discussed with the tax professional preparing your taxes.
For help figuring how your insurance will affect your tax return, call the professionals at Brown Kinion and Company.