What You Need to Know About Obamacare and Your 2015 Taxes

Will you have to pay an Obamacare tax penalty?

The Affordable Care Act (ACA, also know as Obamacare) mandates that all individuals in the U.S. must have health insurance unless they qualify for an exemption. If you don’t qualify for an exemption and you went without health insurance for 3 months or more in 2015, you’ll have to pay a penalty on your 2015 tax return.

How much will you have to pay?

You’ll either pay a percentage of your household’s taxable income (you’ll calculate this on your tax return), or a flat rate penalty, whichever is greater. For the tax year 2015, the numbers are 2% of your household’s taxable income, or $325 per adult and $162.50 per child with a maximum of $975. These numbers will increase for tax year 2016 to 2.5% of household taxable income and $695 per adult and $347.50 per child with a maximum of $2,085.

Do you qualify for an exemption from the penalty?

If you qualify for an exemption, you won’t pay a tax penalty even if you didn’t have health insurance at all in 2015. You may qualify for an exemption if any of the following are true:

  • Even the least expensive coverage available costs more than 8% of your household income
  • You were uninsured for less than 3 months of the year
  • You are exempt from filing a tax return because your income is below the filing threshold
  • You are Native American
  • The use of insurance is not acceptable in your religion
  • You’re in prison
  • You are part of a health care sharing ministry
  • You have been out of the country for more than a year
  • You qualify for a hardship exemption (examples are homelessness, bankruptcy, etc.)

If you do qualify for an exemption, you can claim it when you file your 2015 tax return or you can apply for in through healthcare.gov.

If you don’t qualify for an exemption and you didn’t have health insurance for a large portion of 2015, there isn’t much left that you can do to avoid the penalty for tax year 2015. It pays to plan ahead – so get planning for 2016 and make sure you’ve got yourself covered.