What Are the Tax Exemptions and Payments for Not Having Health Insurance?
Note: As soon as any changes are made to the Affordable Care Act, we will update this page accordingly.
Almost all U.S. citizens and legal residents (including dependents) are required to have health insurance for the entire year because of the Affordable Care Act (Obamacare). If you don't have health insurance during the year, you may have to pay a fee for not having insurance. However, you may qualify for a tax payment exemption.
Check out the topics below for a general overview of tax payment and tax payment exemptions for not having health insurance:
What Is the Tax Payment for Not Having Health Insurance?
If you are not covered by health insurance during 2017, you may owe a tax fee that is known as the individual shared responsibility payment payable at the time you file your 2017 Tax Return on efile.com. According to current law, the payment will be phased in over three years. 2017 is the 3rd year of the phase-in.
For 2017, the payment will be either the Flat Fee OR the Percentage of Household Income, whichever method is higher:
1. The Flat Fee for 2017 is $695 per adult and $347.50 per child under 18 years, but not over the maximum of $2,085 per family.
2. The Percentage of Household Income for 2017 is 2.5% of your taxable income over the minimum filing amount for your filing status, but not over the average cost for the Bronze level health plan available through the Marketplace in 2017.
Here are the 2017 average costs for bronze level coverage:
- $223 per month for an individual (or $2,676 annual)
- $1,115 per month for a family with 5 or more members (or $13,380 annual)
The following is what a Single unmarried person with no dependents, who had no health insurance for 2017, with a total income of $40,000 would pay:
1. Using the Flat Fee method - The flat fee for this person would be $695.00
2. Note - Using the Percentage of Household Income method - The total income for this person is $40,000. The 2017 minimum filing requirement for a Single person is $10,350. This amount is subtracted from the total income resulting in $29,650 and 2.5% of $29,650 is $741.25.
Result - Since $741.25 is larger than the flat fee of $695.00, this person would have a total payment of $741.25 for 2017 (or $61.77/month for every month that they did not have health insurance in 2017). This person would make their payment when they file their 2017 tax return in April 2018.
Can I Claim a Tax Payment Exemption for Not Having Insurance?
You may be able to qualify for an exemption to the tax payment if any of the following is true for you:
- you are uninsured for less than 3 months of the year
- the lowest priced coverage for you would cost more than 8% of your income
- you don't need to file a tax return because your income is too low
- you are part of a recognized religious group with objections to health insurance
- you are a member of a recognized health care sharing ministry
- you are a Native American eligible for services through an Indian Health Services provider
- you are incarcerated (either detained or jailed)
- you are neither a U.S. citizen, a U.S. national, nor an alien lawfully present in the U.S.
If you are not able to purchase health insurance due to a "hardship", you might qualify for the hardship exemption. To qualify for an exemption, you must be facing any of the various circumstances defined by the Health Insurance Marketplace, such as:
- you filed for bankruptcy in the last six months
- you were homeless
- you received a shut-off notice from a utility company
- you had medical expenses that you could not pay in the last 24 months, which resulted in substantial debt
- you recently experience domestic violence
- your individual insurance plan was canceled and you believe other Marketplace plans are unaffordable
- you experienced another hardship in obtaining health insurance
- you experienced a fire, flood, or other natural or human-caused disaster that caused substantial damage to your property
For more information about the hardship exemption, see HealthCare.gov/exemptions.
How Do I Apply For a Tax Payment Exemption?
There are two ways you can apply for an exemption:
- Claim it on your federal tax return using Form 8965, Health Care Exemptions, OR
- Apply for it using the right Health Insurance Marketplace form (based on your situation)
When you prepare your tax return on efile.com, we will automatically generate the health care exemption form for you based on your answers to the tax questions. We will then guide you in completing and efiling the form with your tax return.
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What if I Am Eligible for an Exemption From Health Insurance for One Month
You are not responsible for the tax payment for not having insurance for that month. However, you must claim the exemption on your tax return or report the exemption you obtained from the Marketplace (also known as Exchange) by completing Form 8965, Health Coverage Exemptions, and including it with your filed tax return.
Related Health Care Tax Information