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What happens if I don’t want health insurance?

A brief overview...
  • If you do not have health insurance, you may have to pay the individual mandate penalty fine
  • The penalty fine is calculated either as a set amount or a percentage of your annual income
  • You pay the fee when you file your federal tax returns for the previous year
  • You may be eligible for an exemption from the penalty fine depending on certain circumstances in your life

If you choose not to purchase health insurance, you will most likely be responsible for paying the individual mandate penalty fine. This is a monthly fee, so you will only pay 1/12 of the annual fee for each individual month that you went without insurance.

You have to pay it when you file your federal taxes for the previous year. If you choose not to pay the fine, the amount will be deducted from your tax refund the next year. The IRS will not pursue any criminal action or other typical means of collection if you do not pay the fine.

There are two different ways to calculate the fee and you will have to pay the one that is higher; the first way is 2.5 percent of your household income with a maximum set to the annual average cost of a bronze health plan on the marketplace. The other way is a set fee of $695 per adult in the household and $347.50 per child with a maximum set to $2,085.

You only have to pay the individual fine for the people in your household who do not have health insurance, not everyone in the house. However, you can be fined a percentage of your entire household income, except for the amount that is below the tax filing threshold.

To avoid fees and the burden of exorbitant medical costs, enter your zip code above to compare free health insurance quotes and find the right plan for you!

Are there exemptions to the individual mandate penalty fine?

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There are some exemptions to the individual mandate penalty fine you might qualify for.

If your income is below the filing limit, which was recently listed as $10,000 for someone filing as an individual and $20,000 for a couple filing jointly, you do not have to pay the penalty fine. Since you do not have to file taxes at all, you do not need to fill out and submit an exemption form.

You may also qualify for an exemption for certain religious reasons or if you are a member of an Indian tribe that is nationally recognized. Illegal immigrants and those who are incarcerated are also exempt from the fee since they are not eligible to purchase an insurance plan through the healthcare exchange marketplace.

What is a hardship exemption?

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Certain circumstances might make you eligible for a hardship exemption. This includes several financial situations such as homelessness, eviction, and bankruptcy.

You may need to provide evidence of these circumstances by submitting an eviction notice or a copy of your bankruptcy filing.

If you recently experienced a fire or other disaster, a death in the family, or you were a victim of domestic violence, you may also qualify for an exemption. If you had other difficulties getting health insurance or your state did not expand Medicaid and you would have been eligible otherwise, you might be exempt as well.

What is the short coverage gap exemption?

If you only went without coverage for a short period of time, you may be eligible for the short coverage gap exemption. You can go without coverage for two complete months and still qualify for this exemption. You must have coverage for the third month in order to be eligible for the short coverage gap exemption.

When you file your taxes, you will use Code B to claim your exemption. You may need documentation to prove that you enrolled in a health insurance plan by the third month. You can only use this exemption once in any given year.

What is an affordability exemption?

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If you do not want health insurance because it is too expensive for you, you might not have to pay the fine. Some people may qualify for an affordability exemption depending on their salary and the cost of their health insurance plan.

If the cheapest plan available to you costs more than 8 percent of your modified adjusted gross income for the year, you do not have to purchase an insurance plan or pay the individual mandate penalty fine.

Keep in mind that your modified adjusted gross income is not just your salary, it can include non-taxable income as well.

If your employer sponsored insurance plan costs more than 9.5 percent of your income after your employer has contributed their portion of the premium, you may be eligible for this exemption as well.

What is the family affordability glitch?

The family affordability glitch occurs when employer sponsored coverage costs less than 9.5 percent of the employee’s salary, but more than 8 percent of the household income. When employers offer coverage that is less than 9.5 percent of your income, you are not eligible for cost assistance through the Healthcare Exchange.

If this is the case, there is a good chance you will be eligible for an affordability exemption and not have to pay the fine.

What happens if I don’t want health insurance?

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If you do not want health insurance, you might be responsible for paying a penalty fine when you file your federal tax returns for the previous year. You can either pay it as an individual fee or a percentage of the household income, depending on which is higher. If you are going through a difficult financial situation or another life event, you may be eligible for an exemption from the fine.

Health insurance may be more affordable than you think. Compare prices between different insurance companies to find a plan that works for you and avoid paying the individual mandate penalty fine.

Enter your zip code below to compare free health insurance quotes for all sorts of plans, ranging from full private health insurance to short-term and catastrophic coverage. Even if you don’t want health insurance, buying a cheap plan can save you a penalty down the line and keep you protected in the event of a medical emergency.

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