Lack of health insurance could trigger tax penalty

Tax season is upon us all, once again. But, new this year, everyone who is employed and has filled out any official tax forms will be required to have secured health insurance to avoid paying a penalty.

For anyone filing taxes for income earned in 2014, the penalty under the federal Affordable Care Act (i.e., “Obamacare”) will be 1 percent of reported household income (based on income above $10,000 for most individuals), or $95 per uninsured person in the household. The taxpayer must pay the higher of those two amounts, according to healthcare.gov (the federal government’s website for the Act).

The fee will be calculated when filing taxes. The last day to file federal and state tax returns for 2014 is April 15. In general, income taxes get filed for the previous year during the first quarter of the current year.

Acceptable forms of health insurance for tax filers include “(a)ny marketplace plan, or any individual insurance plan they already have,” according to healthcare.gov. Insurance provided by employers is acceptable, as are Medicare and Medicaid, The Children’s Health Insurance Program (CHIP), TRICARE (for current service members and military retirees, their families, and survivors), other veterans’ healthcare services, Peace Corps. volunteer plans, and “self-funded health coverage offered to students by universities for plan or policy years that begin on or before Dec. 31, 2014.”

There are a few ways to avoid paying the penalty fee besides having coverage. There are 14 “hardship exemptions,” according to an article in Forbes Magazine and on healthcare.gov. The easiest way is to be homeless, but other ways include shut-off notices from utility companies. All one would have to do is show a copy of the notice.

If unpaid medical expenses from within 24 months before filing taxes exist, then one would qualify for an exemption (copies of medical bills would be required).

Affiliation with a recognized organization or religious group that does not recognize insurance as a necessity may also qualify individuals for exemption. Forms are available on healthcare.gov/fees-exemptions/apply-for-exemption/.

Dodging insurance may be costly come tax season, but with the right tools, and correct affiliations, exemptions are possible to most people.