Ca health insurance penalty

According to the Affordable Care Act, if you do not get health insurance coverage, you will be penalized at tax time. To avoid a penalty for no health insurance, you must have either a valid exemption or you must be enrolled on a qualified health plan. If you are uninsured for part of the calendar year, you may still be exempt from a penalty so long as you are uninsured for less than three consecutive months. You may also be exempt from a penalty if you are part of a Federally-recognized American-Indian tribe or if you are enrolled on a grandfathered plan * .

The penalty for no health insurance increases each year:

  • In 2015, the penalty is the greater of $325 per adult and $162.50 per child, or 2% of your taxable household income minus the federal tax-filing threshold, which is the minimum income required by the IRS for someone to file an income tax return.
  • In 2016, the penalty goes up to the greater of $695 per adult and $347.50 per child, or 2.5% of your taxable household income minus the federal tax-filing threshold.
  • In 2017 and beyond, the penalty increases to the greater of $695 per adult and $347.50 per child, plus COLA (“Cost of Living Adjustment”), or 2.5% of your taxable household income minus the federal tax-filing threshold.

You have 3 options and two of them involve a penalty:

  • Get no insurance and pay a penalty for no health insurance at tax time.
  • Get cheap insurance (that doesn’t meet the minimum essential benefits requirements) and pay a penalty at tax time.
  • Enroll in a qualified health plan. This option does not have to be through Covered California to avoid the penalty, but it does have to be a Covered California plan in order to qualify for a government subsidy .

Due to the fact that penalties are lower at first, some California residents may opt to simply pay the penalty and go without health insurance coverage, especially in the first couple of years. Another option some may choose is to get cheap coverage (that doesn’t meet the minimum essential benefits requirements) and still pay the penalty. For example, if in tax year 2015 you were single, aged under 65, had a taxable income of $50,000, and you were uninsured the whole year, your penalty would be calculated as follows:

The greater of $395 or… $50,000 income minus $10,150 Federal Minimum Threshold = $39,850 x 2% = $797 penalty. In this scenario, your tax penalty would be $797. If you remained uninsured in 2017, your penalty would go up to approximately $996 depending on the Cost of Living Adjustment and the Federal Minimum Threshold at that time. At $996 per year, that is still only about $83 per month. If you compare that penalty with paying a theoretical $375 a month for a Covered California plan, it may make sense to just pay the penalty for no health insurance.

* If you enrolled on your current plan before March 23, 2010 and have not changed coverage, then you may have grandfathered status. However, not all carriers in California are giving the option to maintain grandfathered status. Check with your insurance carrier to verify if your plan is on grandfathered status.

Related Posts

Ca insurance commissioner elected

This is the end of the preview. Sign up to access the rest of the document. Unf...

Ca state auto insurance laws

Here are some things you need to know about recent vehicle liability insurance changes: ...

Ca unemployment insurance phone number

Next Caller's Advanced Caller ID ® has the largest phone number database linking telephone nu...

Caa cancellation insurance travel

Whether you're traveling within Canada or abroad, you will feel reassured knowing that CAA Tra...

Caa car insurance niagara

Along the way in the past 10 years my wife and I realized we used CAA quite often. So we upgra...

Caa insurance sarnia ontario

Find out more about EVs here, including how much they cost to operate, what models are availab...

Caa travel insurance windsor ontario

We understand that an unforeseen medical emergency can lead to large, out-of-pocket expenses a...

Cab shield insurance dundee

YP - The Real Yellow Pages SM - helps you find the right local businesses to meet your specifi...

Cacchioli general insurance agency

Sylvan Kew Garage LLC, 8002 Kew Gardens Rd Xapt Garage, Jamaica, NY (5.78 miles) Phone (718) 2...

Cai insurance cincinnati

YP - The Real Yellow Pages SM - helps you find the right local businesses to meet your specifi...

Caitland insurance

The National Exercise Division (NED) supports U.S. citizens, first responders, senior governme...

Cal fed insurance

We have a couple of ways you can use to look up and view full details available for an agent o...