Our Arizona health insurance and our international overseas medical insurance guests/clients have asked us what the fines/taxes are for not have a U.S. domestic medical health insurance when residing in the U.S. starting in 2014. Here is that information as well as some additional information.
Right now the fines are pretty set for the next 3 years, starting in 2014. However, this can change too.
These next three years the fines/taxes will be pretty low, compared to not having insurance coverage. However, one thing to mention which we feel most Americans do not know, is that they will have a window of opportunity to get on local domestic insurance each year starting in 2014. For example, to get on a U.S. domestic insurance plan starting on 1-1-2015 one will have the opportunity starting on October 1 – 2014 to December 31 – 2014 to get on. However, if there is a qualifying event like an expat coming back stateside, a marriage, divorce, child going from age 26 to 27 (getting off a parent’s employer based/group insurance policy) then one can apply anytime during that year.
Please note these fines will be “felt” when Americans do their taxes. Thus, April 2015 is when the 2014 fines/taxes will be felt, if one does not have U.S. domestic insurance while in the U.S.
Here are the fines/taxes for those who do not have U.S. domestic insurance while residing in the U.S.
2014: $95 per person (up to 3 people, or $285) or 1% of taxable income, whichever is higher
Examples of (but these can change depending on any new government rules/changes) a 2014 tax/fine:
Example 1: family of two with a taxable income of $26,000
Tax/fine of $260
Because $260 (26k x 1%) is higher than $190 ($95 x 2)
Example 2: Family of 3. Taxable income of $26,000
Tax/fine of $285
Because $285 ($95 x 3) is higher than $260 (26k x 1%)
2015: $325 (up to 3 people, or $975) or up to 2.5% (2% is also shown in the PPACA new health care rules – this will be set in stone probably by 2014) of income, whichever is higher
2016: $695 (up to 3 people, or $2,085) or up to a cap of the national average bronze plan premium. The bronze is the minimum coverage through the exchange program. The exchange program is not a government health care program but the government “roadway” to get private insurance. The exchange is one way to get insurance starting in 2014. The other ways to get health insurance is direct to the health insurance company, an insurance broker/agent, or through employer group policy.
Examples of (but these can change depending on any new government rules/changes) a 2016 tax/fine:
Example 1: Family of 3. Taxable income of $26,000
Tax/fine of $2085
Because $2085 ($695 x 3) is higher than $650 (26k x 2.5%)
Example 2: Family of 3. Taxable income of $85,000
Tax/fine of $2,125
Because $2,125 (85k x2.5%) is higher than $2,085 ($695 x 3)
Example 3: Family of 8. Taxable income of $85,000
Tax/fine of $2,125
Because $2,125 ($85k x 2.5%) is higher than $2,085 ($695 x 3)
Example 4: Family of 8. Taxable income of $300,000
Tax/fine of $7,500
Because $7,500 (300k x 2.5%) is higher than $2,085 ($695 x 3)
2017 onwards: Dollar amount is indexed from 2016 numbers. Adjusted annually for cost of living increases with the $ from 2016 fines
Please Note: To be eligible for subsidies a household must meet two conditions (1) household income must be less than 400% of the federal poverty level (FPL) which varies with family size. For a family of 4 in 2012, 400% FPL equals $92,200. (2) The household’s portion of the employer-sponsored health insurance premium (group health insurance through one’s employer if the employee of the company has one) must exceed 9.5% of household income.