Understanding the Health Insurance Tax Penalty
Health insurance is the best way to save money on medical care. And as it turns out, it could also save you money when tax season comes around. Indeed, in certain states, you can be fined for not having coverage.
Here’s everything you need to know about health insurance tax penalties and why you should avoid them.
State Health Insurance Tax Penalties
In California, you’ll pay $850 per adult and $425 per dependent child under 18 in the household if you go uninsured for the entire year.
In Washington DC, you’ll pay $700 per adult and $350 per dependent child under 18 in the household (up to $2,100 per family) if you go uninsured for the entire year.
A few other things to note:
There is a grace period for going uninsured: if you don't have health insurance for less than three months of the year, you won’t have to pay a fine.
Paying the penalty does not mean you have health insurance coverage. You will still be responsible for 100 percent of the costs of your medical care.
But I Don't Want to Pay!
There are a few ways to avoid paying the penalty:
Buy health insurance. Sounds straightforward, but it's true! The Open Enrollment Period is from November 1 to December 15. Buying insurance is often less expensive than the penalty itself — in fact, four in five people can find a plan for less than $10 per month.
Accurately estimate your income. Reporting the right income amount when applying for a government discount will spare you a headache next April. This guide has a few tips to help you out.
See if you qualify for an exemption. The government has a whole list of exemptions to the penalty. Here are some common scenarios that make the list:
You lived in a state that didn’t expand its Medicaid program but you would have qualified if it had
You received a shut-off notice from a utility company.
You had medical expenses you couldn’t pay in the last 24 months that resulted in substantial debt
Your individual insurance plan was cancelled and you believe other Marketplace plans are unaffordable.
To see the full list, click here. Have any questions? Make sure to reach out to us — we're always here to help!
