Health Insurance, Exemptions, and Tax Penalties in 2018

In 2018, we are still under the mandate of needing health insurance in order to avoid paying a penalty. It is not until 2019 when federal tax law changes go into effect that will eliminate the need for health insurance to avoid that penalty fee. In some cases, individuals may be exempt from having to pay the penalty in 2018. Those who are not subject to pay the penalty fall under the following scenarios:

• Individuals who are not required to file taxes – Requirements to file taxes are dependent upon a person’s filing status, age, and income. To find out if you are required to file a federal tax return, you can visit this link here  – https://www.irs.gov/help/ita
• A person who does not have coverage for less than three consecutive months throughout the year
• If “hardship” is encountered and it is difficult for a person to obtain coverage due to financial or domestic situations the prevent them from getting insurance – These hardships can consist of things (that are subject to review) like homelessness, death of family members, bankruptcy, heavy medical debt, or disasters that have caused severe damage to property
• When the least expensive coverage option is not “affordable” – This means the lowest-priced coverage option (through Covered CA, the least expensive ‘Bronze’ plan) would cost more than 8.16% of their annual household income
• Individuals who are incarcerated are not mandated to have health insurance or owe a penalty fee for not having it
• A person who is not lawfully present in the U.S.
• Any members of a religious division (existing since December 31, 1950) that is recognized by the Social Security commissioner as a group opposed to obtaining insurance benefits
• Any persons associated with a health care sharing ministry
• Federally recognized members of American Indian Tribes 

For more information regarding health coverage exemptions, please visit the following link – Health insurance requirement exemptions

The annual penalty for those who fail to obtain coverage and are NOT exempt from getting coverage are as follows:

• $695 per adult
• $347.50 per child
  • Up to $2,085 per family (maximum penalty fee)

OR

• 2.5% of the tax filer’s annual household income minus the federal tax filing threshold

Whichever is greater of the two options above is what a person can owe for not having health insurance.