This year, 2016, should be the last major increase in the penalty amount for individuals and families who do not have health insurance. Ironically, this penalty has been active since January 2014, but is just now becoming more openly talked about as people file their returns and are surprised by the amount they owe.

To bring you up to speed, the government requires every individual to have some type of qualified health insurance policy, however, there are exceptions to this rule. When filing your tax return you may see the tax penalty also referred to as the Individual Mandate…either phrase, it means a monetary penalty is coming your way.

The penalty for not having coverage will be paid on your Federal Income Tax Returns for each full month you or a family member doesn’t have health insurance or an exemption and is based on your Modified Adjusted Gross Income (MAGI).

Everyone Should Be Familiar With How the Penalty Is Calculated

There are two ways to calculate the penalty for your circumstances. Once you’ve calculated the amount each way, whichever amount is higher will be the penalty you’re responsible for paying.

Flat Rate
Within a household, you’ll be charged $695/adult + $347.50/child (up to $2,085 per household). For each full month you or a family member does not have insurance coverage.

Household Income
2.5% of your household income above the tax return filing threshold for your filing status – whichever is greater. You’ll pay 1/12 of the total fee for each full month in which a family member went without coverage or an exemption.

The maximum fee is capped at the national average for a Bronze health plan available in the marketplace, and it’s only paid for full months you or a family member went without coverage.

Previous Years Tax Penalty

2014
The annual fee for not having insurance in 2014 was $95 per adult and $47.50 per child (up to $285 for a family), or it was 1% of your household income above the tax return filing threshold for your filing status – whichever was greater.

2015
The annual fee for not having insurance in 2015 was $325 per adult and $162.50 per child (up to $975 for a family), or it was 2% of your household income above the tax return filing threshold for your filing status – whichever was greater.

Share This