The cost of not having health insurance is going up. It is important that consumers understand the tax penalties, so they can make smart decisions about what health insurance to purchase.
The IRS is using the old “carrot and stick” approach. The carrot being subsidies for most people to help them buy health insurance, and the stick is high penalties if they don’t.
In 2014, the penalty was only $95 or 1% of Adjusted Gross Income, per adult, and half that amount per child. For 2015, the tax penalty for not having a Qualified Health Plan, one that meets Minimum Essential Coverage standards, is going to be much higher. The 2015 penalty is $325, or 2% of Adjusted Gross Income, whichever is HIGHER, per adult, and half that for children under 18.
So if you have a family of 5, with an adjusted gross income of $110,000 per year, and your family went without insurance for the entire year, your penalty for the year would be $7,700. That’s $2,200 for each adult and $1,100 per child.
The good news is that for many people, qualified health plans are very affordable. The same family above, that would face a high tax penalty for not having insurance, would actually qualify for a government subsidy to help them pay the cost of health insurance.