The ObamaCare Penalty for No Insurance

The ObamaCare penalty -- extortion or good for the nation?

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The Obamacare penalty for no insurance infuriates most Texans. In this article find out all you need to know about the Obamacare penalty including who’s exempt.

Distrustful of the U.S. government, with a defiant and independent heritage, Texans are largely unsupportive of a law they little understand. The Obamacare penalty for no insurance sets off more tempers than the firecrackers at the 4th of July. Here are the facts:

The Obamacare Penalty


Under Obamacare, most Americans must either be covered by health insurance or pay a penalty.

Uninsured adults will either pay a flat fee for themselves and their children or pay a share of their income, whichever is greater. The penalty is pro-rated if individuals have coverage for part of the year and won’t be penalized if they go uninsured for less than a three-month period during the year.

The Obamacare penalties start relatively small and ramp up a bit within a few years. But there is a limit. The penalty cannot exceed the national average premium for bronze coverage – the cheapest plan tier — in the state-based exchanges.

For the first year (2014), the flat fee penalty for not obtaining health insurance is $95 per adult and $47.50 per child — up to $285 per family. Alternatively, the fee will be 1% of household income if that results in a larger fine. (Income is defined as total income above the filing threshold, which is $10,000 for an individual and $20,000 for a family in 2013.)

In 2014, the Obamacare penalty for no insurance threatens a married couple earning $50,000 with a $300 penalty while an individual earning that amount would owe $400.

By 2016, the flat fees grow to $695 per adult and $347.50 per child or 2.5% of family income, whichever is greater. By then, the average premium for the lowest tier of Obamacare coverage (bronze plan) is expected to hit as much as $5,000 for an individual and $12,500 for a family.

The penalty goes into effect January 1st, 2014 and will be assessed when income tax returns are filed. The IRS refers to the fine as a “shared responsibility payment.”

What Obamacare penalty supporters claim

As expected, the only vocal supporters are administration employees. The penalty is massively resented and hated by Americans nationally. Administration representatives claim the penalty is necessary to ensure the health care legislation is sustainable. No kidding.

“You simply cannot guarantee everyone coverage – regardless of their health status – without also requiring that everyone participate,” said Mike Kreidler, the insurance commissioner for Washington state, in a statement distributed by the Treasury Department. “The individual mandate guarantees personal responsibility. Without it, there’s nothing to prevent people from only buying health insurance when they need it – which is similar to allowing people to buy homeowners insurance when their house is on fire.”

Obamacare Penalty Exemptions

There are, however, a number of exemptions to the penalty.

In Texas, those who qualify for Medicaid coverage will not be charged because Texas hasn’t taken part in the Obamacare expanded Medicaid program.

Neither will Texans who are temporarily uninsured while between jobs, nor will those who are opposed to having insurance coverage for religious reasons or members of Indian tribes.

Undocumented immigrants and those who earn too little to file tax returns will also be exempt. Finally, individuals who would have to pay more than 8% of their income for health insurance also aren’t subject to the penalty. The uninsured can also file for hardship exemptions.

Collecting the Obamacare Penalty


The Obamacare penalty for no insurance will be assessed when you file your tax returns, however it may be tough for the Internal Revenue Service to actually collect the Obamacare penalty. Jay Angoff, a lawyer who worked on health reform in the Obama administration, explains that Congress didn’t give the IRS any collection authority. Some who don’t pay the fine could see their refunds docked by the penalty amount although most will likely just get nasty letters.

“The penalties have little teeth,” Angoff said. “Congress didn’t give the IRS too much power.”

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