Don't let it get away!
Keep track of the stocks that matter to you.
Help yourself with the Fool's FREE and easy new watchlist service today.
You may have heard that, under Obamacare, everyone is required to have health insurance -- or pay a penalty. This is technically called the individual mandate, but it doesn't apply to everyone. Use this guide to determine if you're exempt from the penalty, what the tax penalty will cost you, and how it will be enforced -- and use this information to weigh your options when making decisions about getting insured.
Who is exempt from the individual mandate?
First, let's take a quick quiz. Are you:
- A member of a religion that is known for objecting to insurance (including Medicare and Social Security)?
- A member of a known health care-sharing ministry?
- American Indian?
- An individual/family whose household income falls below the tax threshold (i.e., you don't file a federal tax return)?
- An individual who has been without health-care coverage for less than three consecutive months?
- Suffering from certified hardship that prevents you from enrolling in coverage?
- An individual/family with a household income that puts the lowest cost insurance plan at greater than 8% of your income?
- Incarcerated, and not awaiting the disposition of charges against you?
- An undocumented immigrant, U.S. national, or alien?
- A citizen who has been abroad for more than one year?
Did you answer yes to any of these questions?
If so, you're exempt from the individual mandate! Depending on your exemption, you may need to file for a certificate of exemption through your marketplace. If you're exempt, you essentially don't have to worry about the individual mandate or the penalty for noncompliance.
How much is the tax penalty?
Those of you who didn't fall into one of the exemption categories will need to buy health insurance before March 31 or pay the penalty. The tax penalty will be phased in starting in 2014 and will be in full effect by 2016.
The government calculates your penalty in one of two ways. The first way is to charge you a fee per adult and another fee per child, but no more than a set total per family; the second way is to charge you a percentage of your family income. You don't get to pick -- your penalty will be the higher of the two sums.
By 2016, you will have to pay the greater of $695 per adult and $347.50 per child (no more than $2,085 per family) or 2.5% of your family income. Following is a fee table starting from 2014.
How will the tax penalty be enforced?
The easy answer is that the government will enforce the penalty through your tax filings. If you choose to take the penalty, but you're unable to afford the payment when tax time comes, the IRS will work out a solution for you. In regard to the individual mandate tax penalty, the IRS cannot impose a lien or levy, or send what you owe to collections.
Tried finding insurance, but running into glitches on the government marketplace sites?
Try an established health insurance marketplace site such as eHealthInsurance.com to see your complete range of options. Be sure to select 2013 to see the plans available now: To see Obamacare plans, select 2014 in your search.