How big is the penalty for not getting health insurance?

The penalty for not getting adequate health insurance is likely higher than the assumed $95. Williams explains how the penalties vary and how big they can get. 

Pablo Martinez Monsivais/AP Photo/ File
President Barack Obama hugs Edna Pemberton, who introduced him, before speaking with volunteers who helped people enroll through the site at Temple Emanu-El in Dallas. Penalties for not signing up for health insurance vary but are likely higher than the assumed $95.

Stories about the Affordable Care Act often tell readers that they’ll have to pay a $95 penalty if they don’t get adequate health insurance coverage. But, like a lot of other things I read about the health law, that’s not quite correct. The penalty (which the Supreme Court said is actually a tax) could be less or, more likely, a lot more. It’s a complicated story.

The basic penalty is $95 in 2014—if you’re unmarried with no dependents and your income is less than $19,500. If your income is higher, you’ll owe more: 1 percent of the amount by which your income exceeds the sum of a single person’s personal exemption and standard deduction in the federal income tax. That’s $10,000 in 2013. But be warned: Income equals adjusted gross income (AGI—that number on the last line on page 1 of your tax return) plus any tax-exempt interest and excluded income earned abroad. If you make $30,000, your penalty will be $200.

Still with me? Good, because it is about to get more confusing. 

If you’re married or have kids, you’ll owe a minimum of $95 per person for yourself, your spouse, and each dependent over age 17 plus half that amount for each child under 18. But the total can’t exceed three times the basic $95 tax, or $285. Except it can. If 1 percent of your income (minus your and your spouse’s personal exemptions and standard deduction—$20,000 in 2013—plus those add-ons) is more than $285, that’s what you’ll owe. Oh, and you’ll have to include your dependents’ income in the calculation.

But there’s a cap. Your total penalty can’t exceed the national average premium for a bronze-level health policy for your family’s size. We don’t know what that is yet but it’s surely more than $95. CBO projects that the average bronze premium in 2016 will be between $4,500 and $5,000 for an individual plan and more than $12,000 for families. If your income exceeds $1.2 million next year, that ceiling might apply.

That’s just for 2014. The penalty will grow over time: The dollar minimums will be $325 in 2015 and $695 in 2016 and will grow with inflation after that (rounded down to multiples of $50). By 2023, it will hit a projected $800. And the percentage of income penalty also grows—to 2 percent in 2015 and 2.5 percent after that.

Some people won’t have to pay the tax. Even if you don’t have insurance, you’re safe if you have religious objections to health insurance, are an American Indian, are in jail, or are “not lawfully present” in the U.S., among other reasons. You’re also protected if buying insurance would impose economic hardship. That happens if it would cost more than 8 percent of your income (defined slightly differently of course).

If you owe a penalty, you’re supposed to pay it with your income tax return. But there’s not much the IRS can do if you don’t pay. They can’t put you in jail or garnish your wages. In fact, about the only way the IRS can collect is if you’re due a refund. They can deduct the penalty from this year’s and future refunds.

A well-known radio personality is urging people to avoid the penalty by making sure you won’t get a tax refund. Ignore him. Trying this requires many years of careful planning and is easy to mess up. Besides, most Americans love their refunds.

There is, of course, a simpler way to avoid the penalty: Sign up for health insurance.

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to

QR Code to How big is the penalty for not getting health insurance?
Read this article in
QR Code to Subscription page
Start your subscription today