A client of mine asked me what is the deal with the health care penalty they're discussing. Will I be penalized for not taking out a health care plan in 2014?
Starting in 2014 all U.S. citizens and legal residents will have to have health insurance, or what is known as qualifying health coverage, which includes coverage through your job, a government plan (such as Medicaid, Medicare, Veterans Administration, and the Armed Services), or a health plan you have purchased on your own.
If you don’t have health insurance, you will pay a tax penalty that will be phased in starting in 2014 with a fine of $95. In 2015, the penalty will increase to $325, and in 2016 to $695 or a percentage of your taxable income. After 2016, your penalty will be increased every year according to the changes in the cost of living.
Are Exemptions or Help Available?
You may be eligible for an exemption or you may be able to get help paying for health insurance it if your income is low.
Exemptions will be granted for the following:
•you have a financial hardship
•you have a genuine religious objection
•you are an American Indian
•you have been without health coverage for less than three months
•you are an undocumented immigrant
•you are in prison
•the lowest cost health plan available in your area exceeds 8% of your income