The recent Tax Cut and Reform Bill eliminated the requirement for individuals to have health insurance. That means that carrying insurance once again becomes optional and individuals will not be penalized for not being covered. There may be some unintentional consequences related to this new law because it takes effect on January 1, 2019. This means that individuals who are not covered by health insurance in 2018 will be subject to penalties.
What is the penalty for not having insurance?
The penalty, officially called the individual shared responsibility payment, is based on household income or per person and considers the number of months a taxpayer was uninsured. For uninsured individuals in 2017 the fee can be broken down as follows:
- Household income – 2.5% of household income
- Per person – $675 for adults and $347.50 for children under 18
- The penalties are capped:
- Households – total annual premium for the average cost of a Bronze plan that can be purchased on the Marketplace
- When calculated per person – $2,085
A taxpayer will pay whichever of the two penalties is higher. For 2018, the penalty calculations will remain the same but the costs will increase by the official inflation multiplier.
There are qualifying events, called exemptions that shield uninsured individuals from penalties. In order to receive the exemption, you have to first apply for it. The exemptions fall into several categories:
- Income related
- Related to health coverage
- Group membership
- Other – incarceration, living abroad, death of the household member