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Can You Get Penalized for Not Having Health Insurance in 2019?

Prior to 2019, the Affordable Care Act imposed a tax penalty on United States residents who do not have a health insurance plan that meets its requirements. However, this tax penalty has changed after January 1st, 2019 due to new rules under the Trump Administration. Do you still need health insurance coverage in 2019, and what consequences could you face if you do not comply?

The Health Care Tax Penalty for 2019

Thanks to new regulations imposed by the federal government, you will not have to pay a tax penalty for a lack of health care coverage in 2019 and beyond. However, you will still have to pay a penalty if you did not have health coverage in any month during 2018. On the 2018 taxes you will file by April of this year, you will still have to pay the tax penalty. On your 2019 tax forms due in April 2020, you will not have to pay a penalty.

If you do not have coverage during any month of 2019, the fee does not apply. You do not need an exemption to avoid this tax penalty. You will have to pay a fee for any month of 2018 that you, your spouse, or your qualified dependents did not have the minimum essential coverage as defined by the Affordable Care Act. You will pay this fee when you file your taxes. However, you may qualify for an exemption under certain criteria.

What Qualifies as Insurance Coverage?

The following forms of coverage qualify as minimum health insurance under the Affordable Care Act.

• An individual, private insurance plan
• A plan provided by your employer
• Coverage under Medicare, Medicaid, or the Children’s Health Insurance Program
• Peace Corps coverage
• Veterans’ health care coverage
• U.S. military coverage (TRICARE)

Supplemental health care insurance does not qualify as coverage. For example, the government will not accept workers’ compensation, dental insurance, and vision insurance to satisfy the coverage requirement.

Who Is Exempt from the 2018 Tax Penalty?

Some Arizona residents can avoid the 2018 tax penalty if they qualify for an exemption under the Affordable Care Act.

• You are not a legal resident of the United States.
• You are a member of a recognized religion that holds beliefs against health insurance.
• You do not have insurance for less than three months out of the year.
• You cannot file a tax return because you have a very low income.
• You are a member of a federally recognized tribe.
• You are currently in prison.
• You can prove that you cannot afford health care coverage.
• You are a member of a health care sharing ministry.

How Much Is the 2018 Tax Penalty?

The Internal Revenue Service calculates the health care tax penalties through two methods. You will either have to pay a percentage of your annual household income or you will have to pay a fee per person. The IRS makes you pay whichever fee is higher.

First, the IRS will calculate the yearly tax penalty for a lack of health care coverage. They will calculate a percentage of your household income that’s above your annual tax filing requirement or they will use a fixed, per-person amount for anyone in your household who does not have coverage.

• For 2018 taxes, the IRS will calculate the tax penalty by using 2.5% of the annual household income.

• For 2018 taxes, the IRS will use the 2017 per person amount plus any adjustments for inflation. You will pay at least $695 per adult and $347.50 per minor child.

The IRS will impose the full fee if you do not have coverage for the entire year or 1/12 of the full penalty if you only had coverage for a part of the year. However, if you did not have coverage for only 1 or 2 months per year, you will not pay a tax penalty.