Health Insurance : Penalty

September 28, 2018

Q: I’ve heard the penalty for having health insurance has gone away?

A: Not Yet!

What’s the status of the penalty?

The penalty was repealed as part of the GOP Tax Bill that was signed late in 2017. The repeal does not take effect until 2019. People who were uninsured in 2018 still face a penalty when they file their taxes in early 2019. But people who are uninsured in 2019 and beyond will not be subject to the penalty.

How is the penalty enforced?

Remember tax returns now include a question about whether you had health insurance in force throughout the year. In most cases, employers, insurance companies and the exchange report directly to the IRS, which helps to verify your information. Starting in 2017 the IRS did not accept a tax return if you left the health coverage blank.

The IRS collects your penalty owed from your refund or bills you if you have no refund. In January 2017, the IRS reported 6.5 million tax payers had reported a total of $3 billion in ACA penalty payments for 2015. The average penalty amount was around $470.

2016 2017 2018
$695 $695 $695
Or Or Or
2.5% 2.5% 2.5%

Whichever is higher!