As you probably know, under the Affordable Care Act (“Obamacare”), if you do not have a qualified health insurance plan then you will technically be charged a penalty on your 2014 taxes. This provision is what is commonly referred to as the “individual mandate.”
Let’s answer a few frequently asked questions about the individual mandate and the penalty:
How much is the penalty?
This is what you really want to know! The law stipulates that the penalty for not having a compliant health plan in 2014 is the greater of $95 or 1% of your adjusted gross income for the year. For nearly everyone who pays taxes, then, you can plan on a penalty of 1% of your AGI.
Just to be clear, if your adjusted gross income for 2014 is $50,000, your penalty is $500. If your income is $100,000, your penalty is $1,000. You get the idea.
While this sounds like a lot (probably because it is a lot!), it’s only fair to point out that it is a lot less than the premiums you’d pay for a compliant health insurance plan (assuming you do not qualify for a subsidy to help pay premiums).
If I am covered at work am I exempt?
If your employer covers you on a group health insurance plan, you are exempt from the individual mandate and the fine.
What if I already have an individual health insurance policy?
If you already have an individual health insurance plan, you should be OK. If your plan is grandfathered, you will be able to keep it. If your plan is not grandfathered (you’ve purchased it or made changes since March of 2010), your insurance company will alert you as to when you will have to make a change. Much will depend on the insurance company’s approach and on the renewal date of your policy, but you can generally trust that they will keep you compliant.
Now, if you have a policy that is not truly a health insurance plan — something like a limited benefit plan or an “indemnity” plan, you will need to change to comply with the law. Limited benefit policies are not true health insurance plans and thus do not satisfy the law’s individual mandate.
What is the deadline to avoid the penalty?
If you want to avoid the penalty for not complying with the individual mandate, you will have to apply for coverage no later than March 31. Additionally, please note that after that date, health insurance companies will no longer accept new applications for individual health insurance unless you have a qualifying event.
What if it’s too late?
If you missed the deadline, there are a few things you can consider as alternatives to Obamacare. The only way to get catastrophic coverage (a cap on your costs for healthcare) will be a short-term health insurance plan. You’ll find that a short-term plan can provide a solid safety net at a much more affordable price when compared with the health insurance options in Obamacare (without subsidies).
[button url=”https://acforrest.com/can-dont-health-insurance-alternatives-obamacare/”]Get a quote on short-term health insurance here[/button]
You might also consider one or more supplemental policies like accident insurance or critical illness insurance (or a cool plan that combines several in one affordable bundle).
If you have more questions or want to talk specifically about your situation we invite you to contact us.
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