There are less than two weeks left to sign up for health insurance before the Affordable Care Act's open enrollment March 31st deadline. If you are required to have health insurance and haven't purchased health care coverage by that date, you generally can't enroll in health coverage through the Health Insurance Marketplace after open enrollment, may face a tax penalty on your 2014 taxes filed in 2015, and must wait until the next open enrollment period unless you have a qualifying life event. If you already have insurance through your employer, Medicaid, Medicare or a private provider, you're covered and will not receive a penalty as long as your insurance meets minimum standards under the Affordable Care Act.
If you're uninsured and have not yet enrolled in a health insurance plan, here are five things you should know and do before the deadline and penalty:
Find out if you're required to purchase health insurance. Under the Affordable Care Act, everyone is required to have health insurance or is subject to pay a tax penalty (in 2015 when 2014 taxes are filed) unless you meet a qualifying exemption. These exemptions include:
- Your household income is less than the IRS income tax filing requirement (10,000 if single,20,000 married filing jointly);
- You are a member of certain religious sects or ministries, or of a federally recognized Native American tribe;
- Uninsured for less than three consecutive months in a year;
- Not able to get insurance because of hardship or the lowest premium is more than eight percent of your household income;
- Uninsured because your insurance plan was recently cancelled and you can't afford a marketplace plan;
- Your health insurance does not meet minimum coverage standards, but your state insurance commissioner allows your insurer to continue to offer out of date plans until the October 1st, 2016 additional grace period.
Additionally, if you are under the age of 26, you can stay on or be added to your parents' health insurance plan, even if you don't live with them. If you just had a birthday and turned 26, you will now be required to purchase health insurance by the March 31st deadline, unless you qualify for one of the exemptions mentioned above.
Find out if you're eligible for a subsidy. To help pay for the cost of health insurance, you may be eligible for financial assistance from the government, in the form of a subsidy. Your eligibility is generally determined by your household income and family size. You can quickly and easily find out if you qualify for a tax subsidy by using this health care calculator from TurboTax. If you qualify, the subsidy can go directly to your health insurance provider when you purchase insurance. This will lower your monthly health insurance payments or premium amounts.
Know what you'll pay in penalties for not having health insurance. If you don't purchase health insurance by the March 31st deadline, you may face a penalty on your 2014 taxes (the return you'll file in 2015). The tax penalty is based on family size and income; however, there is no penalty for a gap in coverage less than three months within a single year. For 2014, the annual one-time penalty will be $95 per adult, or one percent of your total income depending on your income. For uninsured children in your household, the penalty is $47.50 per child with a maximum family penalty of $285. TurboTax has a penalty calculator that will estimate your tax penalty if you choose not to get health insurance.
In tax years 2015 and 2016, the penalty increases quite a bit. The amount you owe will be pro-rated to the number of months you didn't have insurance.
Find out more about the March 31 deadline and the Affordable Care Act. You can find out more about the March 31 deadline and how the new law impacts you by visiting TurboTax Health, where you can find out if you're eligible for a subsidy, get an estimate of the subsidy, your out of pocket costs, and your tax penalty if you don't purchase insurance. You can use HealthCare.gov to apply for health insurance, compare plans, and enroll online. You can also apply by phone or get in-person help with your application.
Learn about your options if you miss the March 31st deadline. Unless you have a life changing event, like getting married or having a child, you have to wait until the next open enrollment period, which begins again on November 15, 2014 through February 15, 2015. If you do have a life changing event, you get a special enrollment period outside of the regular enrollment period, but must enroll in a health plan within 60 days of the life event.
Do you have other questions about how to sign up for health insurance or how you might be impacted? Let us know in the comments.
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Follow Lisa Greene-Lewis, CPA on Twitter: www.twitter.com/@TTaxLisa