Is everyone required to have health insurance or pay a fine?

Most people who can afford to buy health insurance but don’t do so will face a penalty, sometimes called a “shared responsibility payment.”聽, which began in 2014,聽applies to adults and children alike, but there are exceptions for certain groups of people and those who are experiencing financial hardship.

What kind of insurance satisfies the requirement to have coverage?

Most plans that provide comprehensive coverage count as “.” That includes job-based insurance and plans purchased on the individual market, either on or off the exchange. Most Medicaid plans and Medicare Part A, which covers hospital benefits, count as well, as do most types of Tricare military coverage and some Veterans Affairs coverage.

Insurance that provides limited benefits generally does not qualify, including standalone vision and dental plans or plans that only pay in the event someone has an accident, or gets cancer or another specified illness.

If I聽don’t have health insurance, how much will I聽owe?

The penalty has risen each year since 2014.聽For聽2015,聽聽is the and聽$162.50聽per child under age 18, up to a maximum of聽$975聽per family, or聽2聽percent of the portion of your family’s modified adjusted gross income that is more than the聽.聽That threshold is聽$10,300聽for an individual,$13,250聽for a head of household and聽$20,600聽for a married couple filing jointly.

For聽2016, the penalty聽will be the greater of $695 or 2.5 percent of income.

Although much of the discussion is often about the flat dollar penalty – $325 in 2015 鈥斅爉any people will be paying substantially more than that. A single person earning more than聽$26,550聽would not qualify for the聽$325聽penalty ($26,550 – $10,300 = $16,250 x 2 percent = $325.)聽聽is the standard that will apply in most cases, say experts. For example, for a single person whose modified adjusted gross income is $35,000, the penalty would be聽$494聽($35,000 – $10,300 = $24,700 x 2 percent = $494. That same individual would have paid $249 in penalties for 2014.

The penalty is capped at the national average price for a bronze plan,聽which the was $2,484 for an individual and $12,240 for a family of five or more in 2015.

Many more people will be able to avoid the penalty altogether because their income is below the filing threshold.

If I owe a penalty for not having insurance,聽 how do I pay it?

If you had health insurance for聽聽at all, you’ll have to file聽, which allows you to claim an exemption from the requirement to have insurance or calculate your penalty for the months that you weren’t covered.

What if I just realized I face a penalty. Can I do anything to avoid a penalty next year?

Open enrollment for聽2016聽coverage ended聽Jan. 31.聽However, if you have a change in your life circumstances such as getting married, adopting a child or losing your job and your health insurance, it may trigger a聽聽during which you can sign up for or change coverage and avoid paying a fine. In addition, if your income is low and meets聽guidelines in the law, you can generally sign up for your state’s CHIP or Medicaid program at any time.

What if I have a gap in coverage after open enrollment ends? Will I have to pay a fine?

It depends. If the gap in coverage is less than three consecutive months, you聽can avoid owing a penalty. Subsequent coverage gaps during the year, however, could trigger a fine.

If you have聽coverage for even one day during a month, it counts as coverage for that month. The penalty, if there is one, would be calculated in monthly increments.

Are parents responsible for paying the penalty if their kids don’t have coverage?

They may be. If you聽claim a child as a dependent on your聽tax return, you’ll聽be on the hook for聽the penalty聽if the child doesn’t have insurance. In cases where parents are divorced, the parent who claims the child as a tax dependent would be responsible for the penalty.

Who’s exempt from the requirement to have insurance?

The list of possible聽聽is a long one.聽You may be eligible for an exemption if:

• Your income is below the federal income tax filing threshold (see above).
• The lowest priced available plan costs more than 8.05 percent of聽your income.
• Your income is less than 138 percent of the federal poverty level (about $16,105 for 2015 coverage for an individual) and your state did not expand Medicaid coverage to adults at聽this income level as permitted under the health law.
• You experienced one of several hardships, including eviction, bankruptcy or domestic violence.
• You are a member of an Indian tribe, health care sharing ministry or a religious group that objects to insurance.
• You are in jail.
• You are an immigrant who is not in the country legally.

For a more complete list go to the聽听补迟听听聽or the聽聽on shared responsibilities provisions on the IRS website.

When should I claim or file for an exemption?

There’s no one-size-fits-all answer. You聽can claim聽聽when聽you file your tax return聽in聽2016, but for others, you will have聽to complete an exemption application available at聽.

Are U.S. citizens living overseas subject to the penalty for not having insurance?

聽for at least 330 days during a 12-month period, you aren’t required to have coverage in the States.

What happens if I don’t pay the penalty?

The IRS may offset your income tax refund to collect the penalty, but that’s about it. Unlike other situations where the tax agency can garnish wages or file liens to collect unpaid taxes,聽聽in cases where people don’t pay the penalty for not having聽insurance.

This story was originally published March 24, 2014.

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