Are You Subject to the Health Care Penalty?


Having a health plan has always been a good idea, but the Affordable Care Act (ACA) made it a requirement, and unlike on the 2016 tax returns, in 2017, the IRS will not accept 'silent returns' (tax returns where the taxpayer does not address the health coverage requirements of the ACA.

If you didn't have a health plan (with minimum essential coverage) in 2017, you will pay a penalty when you file your taxes. The penalty is either 2.5 percent of your household income or a flat fee per person, whichever is greater, according to HealthCare.gov. But there are some exceptions to this rule.

Income and Hardship-Related Exemptions

  • If the lowest-price coverage available to you costs more than 8.13 percent of your household income

  • If your income is not high enough for you to file a tax return

  • If you had a financial hardship that prevented you from buying insurance

  • Hardship exemptions include homelessness, bankruptcy, or steep increases in medical expenses for an aging parent in your care. If you were facing eviction or foreclosure, were a victim of domestic violence, or experienced the death of a family member, you may also qualify. You must apply for a hardship exemption, and if you qualify, you don’t pay a penalty for the months you were uncovered.

Health Coverage-Related Exemptions

  • You were uninsured for no more than two months in a row

  • You lived in a state that didn’t expand its Medicaid program, and meet certain income requirements

Group Membership Exemptions

  • You’re part of a federally recognized tribe

  • You’re an American Indian, Alaska Native, or are eligible for services from the Indian Health Service

  • You’re part of a health care sharing ministry

  • You’re a member of a religious group that is opposed to accepting insurance benefits

Other Possible Exemptions

  • You’re not a U.S. citizen and meet certain requirements

  • You’re a U.S. citizen but you spent 330 days of the year living abroad, or you claimed residency in another country

  • If you were in prison, even for a day, you can claim an exemption for the month

If you qualify for any of the health insurance penalty exemptions listed above, you can claim an additional exemption if someone in your household was born, adopted, or died during the tax year.

View the complete list of exemptions and learn how to apply by visiting HealthCare.gov.

If you still need 2018 health insurance coverage, contact us to learn about a (legal) loophole to qualify for a Special Enrollment Period.

While we are, of course, available to provide you with any business, accounting or tax services, the information contained herein is general in nature; any advice regarding those services should not be construed as tax advice and is not intended as a thorough, in-depth analysis of specific issues, a substitute for a legal, accounting or tax advice or opinion, nor is it sufficient to avoid tax-related penalties to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact Strive Tax & Accounting, LLC or other tax professional prior to taking any action based upon this information. Strive Tax & Accounting, LLC assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

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 Our primary goal as a trusted advisor is to be available and to provide insightful advice to enable our clients to make informed financial decisions.

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Strive Tax & Accounting, LLC

CPA's specializing in small business tax and accounting with emphasis in construction and manufacturing for corporation and passthrough entities.

PO Box 28353

Green Bay, WI 54324

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