It’s understandable that anyone is concerned about the rising costs of health care and health insurance and the potential penalties they could face if they decide to drop coverage.
In recent years, you may have heard that you would face fines, or even pay them yourself, if you didn’t have health insurance. however, that may no longer be the case.
The tax penalties for the American Care Act (also known as obamacare) have largely been lifted. however, there are some states that still require residents to pay a fee if they do not have health insurance. if that seems confusing, we’ll clear it up in this article.
what is obamacare?
Obamacare, also commonly known as the Affordable Care Act (ACA), was a law enacted in 2010 by the us. uu. president barack obama. This new act marked a dramatic revision of the United States. health system.
This law required everyone in the United States to have health insurance coverage. Under obamacare, people would face tax penalties if they didn’t have health insurance coverage for all or part of the year.
the idea behind the aca was to increase the number of people with access to health care and insurance. In addition, another obamacare goal was to reduce the cost of health coverage for people with lower income levels.
obamacare also required health insurance plans to cover ten essential health care services. therefore, obamacare applies to both people who buy health insurance and insurance providers.
how does obamacare work?
so how exactly does obamacare work? Obamacare essentially determines how, when, and what type of coverage you buy. On the one hand, the ACA ensures that everyone has the guarantee of being able to buy coverage. health insurance companies could no longer deny you for pre-existing conditions. Obamacare eliminates long waiting periods and also offers premium tax credits (subsidies) to those who qualify.
Under the ACA, you can only sign up for health insurance during a set open enrollment period, which can vary a bit between states. however, you can enroll at any time of the year if you experience a qualifying life event, such as the birth of a child, job loss, marriage, or moving to a different coverage area.
ACA compliant insurance plans must cover ten essential benefits:
- emergency medical care
- maternity and newborn care
- being hospitalized
- mental and behavioral health and substance use services
- ambulatory care
- rehabilitation services
- pediatric care
- laboratory services
- preventive care
- new jersey
- rhode island
- district of colombia
- new jersey
- rhode island
- district of colombia
- sign up for obamacare during the open enrollment period
- obamacare 101: how obamacare health insurance works
- the special enrollment period under obamacare
in addition, obamacare requires insurance companies to cover at least a specified percentage of estimated medical costs.
what are obamacare tax penalties?
so what are the tax penalties for obamacare? Obamacare tax penalties were federal penalties you would have to pay at tax time if you didn’t have health insurance coverage for all or part of the year. The IRS would assess and collect a penalty if you were uninsured during that tax year unless you qualified for an exemption.
this mandate was an unpopular aspect of obamacare, even though it was put in place to push for compliance with the affordable care act. tax penalties still exist; however, they look very different than when they were first activated in 2014.
are the obamacare sanctions still in force?
Recent President Donald Trump signed the Tax Cuts and Jobs Act in 2017. This bill repealed the ACA’s tax penalty mandate. therefore, obamacare tax penalties are no longer in effect at the federal level as of 2019.
However, several states still require tax penalties for not having health insurance. If you live in New Jersey, Vermont, the District of Columbia, California, Rhode Island, or Massachusetts, you could still face a tax penalty if you don’t have health insurance coverage.
For your peace of mind, it may be beneficial to check your state’s laws before preparing to file taxes, so you know where you stand.
history of obamacare tax sanctions
when the affordable care act (aca), also known as obamacare, was signed into law in 2010, it dramatically changed the health care system in the us. uu. by requiring every individual and family to have health coverage. The law also provides financial assistance to make plans more affordable for Americans with lower income levels.
The beginning of the law included penalties for those who did not have qualifying coverage, known as the individual mandate. This controversial part of ACA was repealed effective January 1, 2019, removing the federal tax penalty if you didn’t enroll in an ACA-compliant health care plan. while the penalty rules still apply, the penalty amounts have been changed to $0, eliminating the financial consequences of not having qualifying coverage.
Please note that while the fine has been repealed at the federal level, you may still face a fine from your state government, depending on where you live.
Which states still have tax penalties?
You may have a state penalty if you live in one of the following states:
how tax penalties were calculated
When federal tax penalties were in effect, they were prorated based on the number of months you were uninsured. people paid a penalty if they didn’t have major medical health insurance that met minimum federal standards for more than two months in a row. in 2018, the penalty for not having coverage was $295 per adult or 2.5% of your household income, whichever was greater.
This table also breaks down how the sanction was applied each year:
Now that the tax penalty has been repealed, there is no longer a financial consequence of not having federal health insurance. however, you may have a state penalty if you live in one of the following states:
get assistance with your insurance needs
No matter where you live and what penalties you may face, ehealth can help you find affordable health insurance that meets your needs and budget. our licensed brokers offer plans in every state, with the ability to enroll for coverage online or over the phone. With 24/7 support to help you navigate the complex world of health care coverage, you can be sure you’re in good hands when you trust eHealth for your insurance needs. Contact us today to start comparing plans in your area.