What Will My Obamacare Penalty Be?
If you owe an Obamacare penalty there is a specific formula to calculate exactly what you owe. There’s a few steps to follow to understand what you’ll pay as a tax penalty.
Who Owes an Obamacare Penalty?
You will owe an Obamacare penalty if you chose to forego health insurance such as a Bronze, Silver, Gold, or Platinum plan for more than 3 months, and/or if you do not qualify for an Obamacare exemption.
How Much is the Obamacare Penalty?
The Obamacare penalty changes from year to year. Your penalty is the higher of the two figures below and maxes out at annual national average premium for a bronze level health plan available through the Marketplace( $2,448 for 2014).
- 2014: 1% or $95/$285 (indiv/family)
- 2015: 2% or $325/$975 (indiv/family)
- 2016: 2.5% or $650/$1,950 (indiv/family)
How do I Calculate My Obamacare Penalty?
There are four steps to figuring out your Obamacare Penalty:
- 1) ADD Household income: This is your adjusted gross income from your tax return. (Household income also includes the adjusted gross incomes of all of your dependents who are required to file tax returns).
- 2) SUBTRACT Tax return filing threshold : This the minimum amount of gross income an individual must make to be required to file a tax return. ($10,150/$20,300 under 65 indiv/fam for 2014*)
- 3) MULTIPLY total: You will multiply 1% and your household minus tax filing threshold (for 2014)
- 4) DETERMINE Greater amount of % versus flat rate
*There are other factors that can play into your threshold. Click here to see the IRS tax return filing threshold.
Obamacare Penalty Example #1
Max is 35, single, and makes $50,000 a year. If he didn’t enroll in a qualifying health plan, this is how his 2014 penalty would break down: $50,000 -$10,150= $39,850. Then multiply $39,850 x 1%=$398.50. Since $398.50 is higher than $95, the penalty would be $398.50.
Obamacare Penalty Example #2
Max and Rita are married with two children. They are both under 50 and make a total of $65,000. If they didn’t enroll in a qualifying health plan, this is how their 2014 penalty would break down: $65,000 -$20,300= $44,700. Then multiply $44,700 x 1%=$447. Since $447 is higher than $385, the penalty would be $477.
For further questions about the Obamacare penalty call the number above.