Penalty for the Uninsured
Wait, there’s a penalty for not having health insurance? Yes, there is. It’s called the Shared Responsibility Penalty. What that means is that if you’re required to have health insurance and don’t – this includes any children or other dependents – or your insurance doesn’t meet the minimum requirements, you’ll be assessed a penalty.
Tax Law Update: The penalty has been repealed beginning with tax year 2019, but is still in effect for 2018 returns.
How the Shared Responsibility Penalty is Assessed
For the 2018 tax year, the penalty will be the greater of:
So how to figure out which amount is greater? The dollar calculation side of that is fairly straightforward. For the percentage of income calculation, first figure out your household’s income above the tax return threshold. Take your income for the year minus the threshold amount, then find 2.5% of that. Here are the tax year 2018 filing thresholds for each filing status:
- Under 65 – $12,000
- Over 65 – $13,600
Head of Household
- Under 65 – $18,000
- Over 65 – $19,600
Married Filing Jointly
- Both spouses under 65 – $24,000
- One spouse 65 or older – $25,300
- Both spouses over 65 – $26,600
Married Filing Separately
- Any age – $5
Qualifying Widow or Widower w/ dependent children
- Under 65 – $24,000
- Over 65 – $25,300
When the Shared Responsibility Penalty is Assessed
The penalty for having no health insurance is assessed when you file your tax return. If you’re not required to file a return, you’re exempt from carrying the minimum healthcare coverage and thus exempt from the penalty.
Technically, if you refuse to pay the penalty, the only recourse the IRS has is to take it from refunds in future years. But: That’s only for the ACA penalty. If you owe any other taxes or penalties, the IRS can place liens and levies and pursue criminal and legal actions against you when you don’t pay. For the Affordable Care Act penalty, though, the IRS can’t place a lien, levy, or pursue criminal or legal action against you.