The Affordable Care Act was introduced with the intent of making healthcare affordable for everyone in the United States. The Affordable Care Act requires every individual in the US to have healthcare insurance.
However, due to the number of people not signing up or otherwise losing their coverage due to miscellaneous reasons, millions in the US will pay the shared responsibility payment which in other words is known as ObamaCare penalty.
This penalty is paid along when you pay your annual taxes.
What does it really cost?
It goes without saying that not taking health insurance is counter-intuitive.
For all those who willingly forego health insurance despite having the means to pay for it the amount of penalty goes something like this:
There are two ways in which the penalty is calculated. An individual either pays 2% of the gross household income or a flat rate, depending on which is the greater amount.
Let’s consider the year 2015, for which the Obamacare penalty or the ACA penalty is 2% of the total household adjusted gross income. This calculation leads us to a figure of $325 per adult and $162.50 per child. There is an upper limit to the penalty amount and it won’t exceed $975.
For 2016, the penalty percentage is 2.5%( since its always adjusted for inflation) with an upper limit of $2,085.
For the tax year 2017 and beyond, the penalty percentage will remain at 2.5%.
How to avoid paying this penalty?
It is very simple to do that. Buying a health insurance policy will suffice.
ACA’s health insurance marketplace is a site that showcases different plans and pricing structure that ACA lists.
The enrollment for 2016 is however over and you can only sign up now before the open enrollment starts again if you have had a life event like marriage, birth of a child etc.
This doesn’t imply that the marketplace is the only available option for you to purchase health insurance. You can also enroll yourself in the group medical insurance your company provides or apply for one privately.
Who is exempt from the Obamacare penalty?
On the other hand, there are people who qualify for an exemption under the ACA. These people won’t be charged a penalty even if they don’t have coverage. The below-mentioned condition are the requirements for the same:
1. You could be exempt if the most affordable healthcare insurance plan costs more than 8% of your household income
2. If you were not insured for less than three months of the year
3. If your income is too low that it doesn’t fall into the income tax filing bracket.
4. Being a Native American who is qualified to receive medical care from an Indian Health service provider.
5. Your religious beliefs stand in opposition to getting insurance.
6. If you’re in prison
7. If you belong to healthcare cost sharing ministry.
8. If you been living outside the United States for the more than a year.
9. If you are homeless, face bankruptcy or eviction.
If you qualify for an exemption, you can claim it when you file your tax return or apply for an exemption on this site Healthcare.gov website.