You won't pay a penalty if:
- you are covered by your employer
- you are covered by the government
(Medicare, Medicaid, CHIP, TRICARE or the VA) - you already have purchased coverage that meets the requirements for a Bronze plan under the ACA
- your income is low enough that your share of premiums (after federal subsidies and employer contributions) would total more than 8 percent of your income
- your income is below the income tax filing threshold
- you were uninsured for less than three months of the year (If over three, penalty is pro-rated)
- you qualify for a religious exclusion
- you are a member of a Native American tribe
- you are an undocumented immigrant
- you are in prison
Frequently Asked Questions about the
Individual Mandate and the Tax
Q. Why should I buy insurance? In this country, if you’re really sick, hospitals have to take care of you, don’t they?
A. No. If you go to the ER they have to “stabilize you”-- that’s all. If an uninsured cancer patient arrives in great pain, she may be admitted, and hospitalized until she either dies, or is well enough to walk out the door. (This is the definition of “stabilized.”) But unless she can pay for further treatment (or can qualify for Medicaid), she won’t be offered the surgery that might save her life. Most surgeons don’t take IOU’s.
Q. If I decide to gamble and go without insurance, isn’t that my business?
A. No, because if you wind up being the uninsured cancer patient who arrives at the ER and is hospitalized, the rest of us pay the bills for your hospital stay. Hospitals pass on the cost of “uncompensated care.”
Q. If I pay the tax, does that buy me an insurance policy?
A. No. You’re not buying insurance; you’re paying a tax that helps keep the health care system afloat. As Princeton economist Uwe Reinhardt explains: “The penalty approximates the cost” that individuals who choose not to purchase insurance “might impose as a group, on hospitals” when they “are treated and released with unpaid bills.”
Q. How does the government collect the tax?
A. If you don’t buy insurance in 2014, you are expected pay the tax when you file your income taxes in April of 2015.
Q. What happens if I don’t?
A. You will receive a notice from the Internal Revenue Service (IRS) stating that you owe the penalty. The IRS can collect the money by reducing the amount of any tax refund that you are owed in the future. But the law says that you will not be subject to criminal prosecution and the government cannot file a notice of lien or file a levy on your property.
Q. If I don’t buy insurance in 2014, but decide to buy it at a later point, can I?
A. Yes, the law is not designed to bar anyone from the system. It just asks that we all contribute to the insurance pool, according to our ability to pay, because eventually, virtually everyone needs medical care.
