http://derlandbahrcpa.com/can-i-get-fined-for-not-having-health-insurance/ "Can I get fined for not having health insurance?" is a common (and valid) question these days. The “shared responsibility payment” also known as penalties for not having health insurance kicks in this year for 2014.

1. Will I be
penalized
for not having health insurance?

2. “Shared Responsibility
Payment”
 The “shared responsibility payment,” also
known as penalties for not having health
insurance, kicks in this year for 2014.
 The employer requirements were extended
to 2015 and 2016, depending on the size of
the business, but the individual penalties are
applicable for the 2014 tax year returns
which will be filed in 2015.

3. “Shared Responsibility
Payment” (continued)
 This does not apply to those who have
qualifying health insurance through their
work or those on Medicaid, Medicare, etc

4. What will the penalty be?
 The penalty is the greater of either the flat
dollar amount or 1% or the taxpayers excess
income (defined below).
 All these calculations will be getting larger
over the next couple of years.

5. What will the penalty be?
(continued)
 The flat dollar amount per individual goes up
from $95 in 2014 to $325 in 2015 to $695 in
2016.
 The income percentage applied to
taxpayers’ excess income goes up from 1%
in 2014 to 2% in 2015 to 2.5% in 2016.

6. How does it work?
 Let’s say you have a family of three with an
$80,000 AGI. The child is under
18. Therefore, the flat dollar amount for
2014 is $227.50 (95.00 + 95.00 +
47.50). Children under 18 are counted at
1/2 the adult fee. However, excess income
is the amount over the total of their standard
deduction and exemptions. In this case their
excess income is $55,750.

7. How does it work?
(Continued)
 For 2014 the standard deduction for MFJ is
$12,400 and the exemptions are $3,950
each for a total of 11,850. Anyway, let’s
assume my math is correct and their excess
income is $55,750. One percent of that is
$557.50, thus their penalty is $557.50. As
mentioned above, their penalty is the
greater of the flat dollar amount or 1% of
their excess income as defined by the IRS.

8. How is “Excess Income”
determined?
 To determine “excess income,” you use the
standard deduction, whether or not you
itemize. In other words, excess income can
be greater than taxable income.

9. Can I just pay the penalty?
 For those considering paying the penalty
going forward, keep in mind that the penalty
amount will be going up significantly over
the next two years.
 Note: Refer back to the information about
increases in the years 2015 and 2016.

10. Are there exceptions?
 There are a number of exceptions to paying
the penalty.
 To see if you qualify please visit
Healthcare.gov. Particularly, you may want
to look at hardship exemptions.

11. When will I have to pay?
 If you are required to pay, the fee for not
having health insurance will be calculated
on your tax return and taken out of any
refund.

12. If you have any questions . . .
 Feel free to contact the Derland Bahr CPA
firm at 254-432-5724.
 Or visit our website at
DerlandBahrCPA.com.