I went to the Post Office this morning to purchase a roll of stamps. While waiting in line, I ran into a local attorney who also prepares income taxes for individuals. In the course of our conversation, he mentioned that if I came to him for tax preparation, he would be required to ask me if I had health insurance coverage, and if I didn't, there would be a tax penalty.

That was a new one on me, so I looked it up at HealthCare.gov, the official IRS web page for explaining such things. Following is the exact copy of what I found:

"The fee for not having health coverage is calculated one of 2 ways. If you or your dependents don't have insurance that qualifies as minimum essential coverage you'll pay either a percentage of your household income or a flat fee -- whichever is higher.

The fee for not having coverage in 2014

If you didn't have coverage in 2014, you'll pay one of these two amounts when you file your 2014 federal tax return:

  • 1% of your yearly household income. (Only the amount of income above the tax filing threshold, about $10,000 for an individual, is used to calculate the penalty.) The maximum penalty is the national average premium for a bronze plan.
  • $95 per person for the year ($47.50 per child under 18). The maximum penalty per family using this method is $285.

The fee in 2015

If you don't have coverage in 2015, you'll pay the higher of these two amounts:

  • 2% of your yearly household income. (Only the amount of income above the tax filing threshold, about $10,000 for an individual, is used to calculate the penalty.) The maximum penalty is the national average premium for a bronze plan.
  • $325 per person for the year ($162.50 per child under 18). The maximum penalty per family using this method is $975.

The fee after 2015

The penalty increases every year. In 2016, it's 2.5% of income or $695 per person. After that it's adjusted for inflation.

 

2014

2015

2016

$95

$325

$695

per adult

per adult

per person

or

or

or

1%

2%

2.50%

of family income

of family income

of family income

(whichever is greater)

(whichever is greater)

(whichever is greater)

 

How you pay the fee

You'll pay the fee on the federal income tax return you file for the year you don't have coverage. Most people will file their 2014 returns in early 2015 and their 2015 returns in early 2016."

NOTE: You may qualify for an exemption from the penalty for not being insured if you are "not lawfully present in the US." (And you know who they are referring to here.)

I am sure you will recall that in the early days of Obamacare, the courts found that it would be unconstitutional for the Federal Government to mandate, or force, an American citizen to purchase something he/she didn't want. Therefore, the Federal Government cannot force you to purchase Obamacare coverage. So it just makes you an offer you can't refuse. I believe the Obama Administration would call that "freedom of choice."

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