How to Avoid Health Insurance Penalties for 2016

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It’s tax time again. This year you may be in for a rude awakening if you have to pay a penalty for not having health insurance in 2015.  According to healthcare.gov, if you can afford health insurance but choose not to buy it, you must pay a fee called the individual shared responsibility payment.  This fee is also called a penalty, fine or individual mandate.  To find out more, we chatted with Gretchen Ismon of Memorial Hermann Health Solutions, Inc., to see what you need to know now to avoid paying the penalty next year.

Q. What is the individual mandate?

A. The Affordable Care Act requires you be enrolled in a health insurance plan that meets basic minimum standards, which are called Essential Health Benefits. If you can afford health insurance, but choose not to enroll, you may have to pay a tax penalty. For 2016, the penalty is the greater of $695 or 2.5% of your modified, adjusted gross income.

Q. What are Essential Health Benefits?

A. The Affordable Care Act ensures health plans available in the individual market offer a comprehensive package of items and services, known as Essential Health Benefits. Essential Health Benefits must include benefits within the following ten (10) categories: Ambulatory Patient Services; Emergency Services; Hospitalization; Maternity and Newborn Care; Mental Health and Substance Use Disorder Services, including Behavioral Health Treatment; Prescription Drugs; Rehabilitative and Habilitative Services and Devices; Laboratory Services; Preventive and Wellness Services; Chronic Disease Management; Pediatric Services, including Dental and Vision care

Q. How do I know if I have to pay a fine or fee?

A. You owe the fee for any month you, your spouse, or your tax dependents don’t have health insurance that qualifies as minimum essential coverage. Click here to see all insurance types that qualify.

Q. How is the fee calculated for 2016?

A. The fee is calculated 2 different ways — as a percentage of your household income or per person.You’ll pay whichever is higher:

(1)Percentage of income:  2.5% of household income.  Maximum: Total yearly premium for the national average price of a Bronze plan sold through the Marketplace.

(2)Per person:  $695 per adult or $347.50 per child under 18; Maximum: $2,085

Health insurance helps patients get the medical care they require

Q. How is the fee collected?

A. You pay the fee when you file your federal tax return for the year you don’t have coverage.

Using the percentage method, only the part of your household income that’s above the yearly tax filing threshold ($10,150 for individuals, $20,300 for couples filing jointly in 2014, the most recent year available) is counted.

Using the per-person method, you pay only for people in your household who don’t have insurance coverage.

If you have coverage for part of the year, the fee is 1/12 of the annual amount for each month you (or your tax dependents) don’t have coverage. If you’re uncovered only 1 or 2 months, you don’t have to pay the fee at all. Learn about the “short gap” exemption.

Q. Can I be exempt?

A. In some cases, you may qualify for a health coverage exemption from the requirement to have insurance. If you qualify, you won’t have to pay the fee.Learn about health coverage exemptions.

Q. Can I qualify for a Special Enrollment Period?

A. Although the official Enrollment Period for 2016 coverage has passed, there are qualifying events that would allow you to have a Special Enrollment Period. Below are the most common qualifying events:

  • Loss of Coverage (Employer Sponsored, Spousal Coverage, COBRA, State Continuation, Layoff, Medicaid/CHIPS)
  • Marriage/Divorce
  • Birth/Adoption
  • Dependent turning 26
  • Moving to the Service Area

Learn more about the individual shared responsibility payment from the Internal Revenue Service.

Looking for health insurance?  Visithttp://memorialhermanninsurance.org/

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Tashika Varma