Block on Trump's Asylum Ban Upheld by Supreme Court
Beginning in 2014, most Americans who lack insurance will have to pay a penalty under Obamacare -- a penalty that's set to increase annually for some uninsured individuals.
Obamacare's individual mandate, which was upheld as constitutional by the U.S. Supreme Court in 2012, requires all Americans to retain a basic level of health insurance coverage by January 1, 2014. Those who don't have health insurance will face a financial penalty.
So what exactly are these penalties, and when are they due?
For individuals, this penalty will be the greater of two amounts:
According to federal regulations published in late August, the penalty, per person, for not maintaining a minimum level of insurance coverage by the beginning of 2014 will be:
So for Americans whose household income is greater than $9,500 -- which accounts for most of the middle and upper classes -- failure to have insurance coverage by the start of 2014 will mean essentially a 1 percent added personal tax burden.
If you fail to obtain sufficient coverage by the Obamacare mandate deadline, the Internal Revenue Service (IRS) will collect that penalty from you through your 2014 tax return.
An IRS spokesman told U.S. News and World Report that the penalty will either "offset any refund" or "add to any balance due" on each year's tax return.
According to Forbes, the IRS cannot pursue you for criminal tax evasion if you refuse to pay the mandate penalty, and no tax liens will be imposed on your assets for the penalty amounts.
It is still unclear how aggressive the IRS will be in collecting the Obamacare penalty. But uninsured Americans who are expecting money back on their returns may find a penalty-sized hole in their IRS refund checks.
Many Americans may choose to pay the penalty in 2014 in lieu of paying for health insurance. But note that the penalty is slated to increase each year:
Forbes reports that because of the gap between the penalties and rising insurance costs, some Americans who feel they don't need health insurance may just choose to continue paying the penalty if it's cheaper.
To refine your Obamacare game plan, including avoiding these potential penalties, look for additional analysis of the law in our "Understanding Obamacare" series. Tomorrow, we'll explain what Obamacare subsidies are and who qualifies for them.
Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.
Sign into your Legal Forms and Services account to manage your estate planning documents.Sign In
Create an account allows to take advantage of these benefits: