Are you familiar with the individual shared responsibility payment? This penalty for not obtaining and maintaining a minimum level of health insurance is scheduled to begin in 2014, and is due with the tax return you’ll file in 2015.
That’s a long way off, so why think about it now? One reason: Today’s decisions will affect tomorrow’s penalties. For example, when you choose to buy a policy meeting minimum requirements and you maintain coverage for the entire year, no penalty is due. That’s true even if you experience a gap in coverage of less than three months.
Thinking of not buying health insurance? Unless you qualify for one of nine exemptions, you’ll owe the penalty. For 2014, the minimum per-adult penalty is $95. The actual amount you’ll pay can be higher, and is based on the number of months you’re uninsured, the amount of your income, and the national average premium for a “bronze-level” plan.
If you fail to pay the penalty with your return, the amount you owe can be withheld from any tax refund due. Though the IRS is prohibited from garnishing your wages or filing a lien for an unpaid penalty, interest will accrue on the balance.
The individual shared responsibility payment is scheduled to increase over time. Give us a call to discuss whether the penalty or one of the exemptions will apply to you.