Skipping Health Insurance? How much will it cost you?

Written By:

Steven G. Horn

The March 31st deadline to enroll in health insurance or face a fine is fast approaching.  If a person doesn’t have health coverage by that deadline, he or she:

  • May have to pay a fee or fine
  • Will not be able to enroll in health insurance until the next open enrollment period, unless he/she has a special qualifying event (change in family status, change in income, etc.)
  • Will have to pay for all his/her healthcare costs out-of-pocket, as they occur

According to, the penalty in 2014 is calculated in one of two ways.  You’ll pay the HIGHER of:

  • 1 % of your yearly household income on the amount of income above your income tax filing threshold (so if you don’t have to file a tax return, you won’t have to pay a penalty).  This fee is capped and tied to the cost of the national average bronze-level insurance plan, which means this year’s top penalty could be about $3,600 for an individual and $11,000 for a family of four.


  • $95 for every family member who lacks health coverage for the year ($47.50 per child under 18 who remains uninsured).  The maximum penalty per family under this part is $285.

Clearly, the 1% of taxable income rule in the first bullet will be higher for many taxpayers than the flat fee rule in the second bullet.  This might surprise some people come tax time next year since the penalty will be first paid on 2014 income tax returns.  And don’t expect the calculation to be easy; the fee is based on the number of months during the year the taxpayer is without “minimum essential coverage” and there are numerous exemptions and credits to consider.   Fortunately, Medicare Part A coverage and most employer-sponsored plans will allow taxpayers to escape the penalty.

For those subject to the penalty, note that it can more than double in 2015 and it increases every year thereafter.

More information can be found at

Pursuant to IRS Circular 230 disclosure requirements, please be advised that any written tax advice or information contained herein is not intended to be used to avoid any penalty imposed by a taxing authority, nor may the recipient of this document use such information for that purpose.  Please contact us with any questions regarding this disclosure.