Blue Flower

Individuals without insurance owe a tax.

Although President Obama's administration delayed the requirement that employers with 50 or more full-time workers provide employees with affordable health coverage or pay a stiff fine, the 2014 starting date for the individual mandate wasn't deferred.

You and your dependents must have qualifying coverage for themselves and their dependents to avoid the tax. This includes, for example, health coverage provided by an employer that meets minimum federal requirements, coverage purchased through an exchange and federal coverage such as Medicare, Medicaid, Tricare and Veterans coverage.

Individuals for whom coverage is too expensive are exempt from the tax.

Employees whose share of premiums exceeds 8% of the household's AGI won't be hit. The same is true for people ineligible for employer coverage if the cost of a basic bronze-level plan in an exchange, less any tax credit for buying insurance, exceeds 8% of the household AGI.

Also exempt: Filers without coverage for periods of less than three months.

And people who can show that a hardship forced them to go without coverage are exempt, including people whose insurance was cancelled and who can't buy an affordable policy.

The tax for being uninsured is normally the higher of two amounts:

The basic penalty or an income-based levy: The basic penalty is $95 a person ($47.50 for each family member who is under the age of 18), with a ceiling of $285. The income-based penalty is 1% of the excess of the taxpayer's household AGI over the minimum level of adjusted gross income needed to trigger filing a return... $10,150 for singles and $20,300 for couples. The tax is lowered proportionally for any months the taxpayer had coverage. The levies will be higher in 2015 and 2016.

But in no case can the tax exceed the cost of a bronze-level exchange plan for the taxpayer and family members, also adjusted for months with health coverage.

IRS has limited remedies to collect this tax. It cannot use liens or levies, so it can only offset tax refunds. Nor can it charge interest on the unpaid balance.

Lower-incomers get a refundable tax credit to help them afford coverage. They can elect to have the credit sent directly to an exchange to help pay premiums or take the credit on their returns. The credit is allowed on a sliding scale for filers with household income over $11,490 for singles and $23,550 for a family of four. It ends as a household income hits $45,960 for singles and $94,200 for a family of four.


If you should have any questions, please contact us at (386)-668-3328 and we will be glad to assist you.