Tax Exemptions and Payments For No Health Insurance

by | Nov 15, 2018 | Top Accounting Tutorials | 0 comments

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Tax Exemptions and Payments For No Health Insurance

Note: This page will be updated if there are any additional changes to the Affordable Care Act in 2019.

Almost all U.S. citizens and legal residents (including dependents) are required to have health insurance for the entire year because of the Affordable Care Act. If you don’t have health insurance during the year, you may have to pay a fee for not having insurance, however, you may qualify for a tax payment exemption. If you do qualify for an exemption, when you prepare your tax return on efile.com, we will automatically generate the health care exemption form for you based on your answers to the tax questions. We will then guide you in completing and efiling the form with your tax return. Or if you have to make a tax payment because you didn’t have insurance all year, we will calculate that payment for you.

If you were not covered by health insurance during 2018, you may owe a tax fee that is known as the individual shared responsibility payment payable at the time you file your 2018 Tax Return in April of 2019. The shared responsibility payment is reduced to zero for tax year 2019 as a result of the Tax Cuts and Jobs Act. There will be no shared responsibility payment on your 2019 tax return.

For 2018, the payment will be either the Flat Fee OR the Percentage of Household Income, whichever method is higher: 

1. The Flat Fee for 2018 is $695 per adult and $347.50 per child under 18 years, but not over the maximum of $2,085 per family.

2. The Percentage of Household Income for 2018 is 2.5% of your taxable income over the minimum filing amount for your filing status, but not over the average cost for the Bronze level health plan available through the Marketplace in 2018.

Below are the 2018 average costs for Bronze level coverage:

EXAMPLE:

The following is what a Single unmarried person with no dependents, who had no health insurance for 2018, with a total income of $40,000 would pay:

1. Using the Flat Fee method – The flat fee for this person would be $695.00

2. Note – Using the Percentage of Household Income method – The total income for this person is $40,000. The 2018 minimum filing requirement for a Single person is $10,400. This amount is subtracted from the total income resulting in $29,600 and 2.5% of $29,600 is $740.

Result – Since $740 is larger than the flat fee of $695.00, this person would have a total payment of $740 for 2018 (or $61.66/month for every month that they did not have health insurance). This person would make their payment when they file their 2018 tax return in April 2019.

You might qualify for an exemption to the tax payment if any of the following is true for you:

If you are not able to purchase health insurance due to a hardship, you might qualify for the hardship exemption. To qualify for an exemption, you must be facing any of the various circumstances defined by the Health Insurance Marketplace, such as:

For more information about the hardship exemption, see HealthCare.gov/exemptions.

There are two ways you can apply for an exemption:

You are not responsible for the tax payment for not having insurance for that month. However, you must claim the exemption on your tax return or report the exemption you obtained from the Marketplace (also known as Exchange) by completing Form 8965, Health Coverage Exemptions, and including it with your filed tax return.

Related Information

Research & References of Tax Exemptions and Payments For No Health Insurance|A&C Accounting And Tax Services
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