Several sections of the Affordable Care Act have been implemented; however, there are a number of changes that won’t go into effect until 2014. What does this mean for taxpayers? The short and sweet answer is that most every American will be required to have health insurance, and many businesses will be required to offer insurance to their employees. The government’s basis for this Act is simply finding a way to get healthy people who don’t feel the need to pay for expensive coverage to purchase health insurance and help fund the cost of people who require more medical care.
Who Isn’t Required to Have Coverage
If you currently do not have coverage and any of the below situations apply to you, you may not be required to purchase coverage.
– You have been uninsured for less than three months.
– You have religious objections.
– You are in prison.
– You face financial hardships.
– You are an undocumented immigrant.
– You are an American Indian.
What if I’m Required to Have Coverage but Choose Not To?
If you are not in one the above situations and choose to not purchase insurance, you could be subject to a penalty. In 2014, you will pay the greater of 1% of your taxable income or $95. In 2015, the fine will be $325 or 2% of your taxable income. In 2016, the penalty will be $695 or 2.5% of your taxable income. Each year after the government will refigure the penalty based on cost of living adjustments, but you can be sure it will increase.
How Much Will This Cost and Who Will Help Me Pay for It?
Like most tax situations, that depends on your income levels. If your income ranges between 133 and 400 percent of the Federal Poverty Level, you could end up receiving premium credits that will help reduce your monthly premium payment. For example, if your income is 400% of the Federal Poverty Level, your premium costs will not be more than
9.5 of your household income.
There are host of unknowns and uncertainties when it comes down to the ACA, and we can help you sort through some of the confusion. Please give us a call so we can discuss your situation and what impact the ACA could have on you.