Obamacare and Tax Season: A Complicated Crossroads for the Insured and Uninsured

This post is also available in: Portuguese (Brazil), Spanish

By Tribuna Staff


This is the second year that Americans are required to have health insurance under Obamacare (the Affordable Care Act), a healthcare reform law that expands access to care through regulations and taxes.

In Connecticut, 116,019 residents signed up for private insurance through the state’s health insurance exchange, Access Health CT, during the open enrollment period that ended in February.

But how will they show they’ve complied with Obamacare’s individual insurance mandate? For most, it will be simple: they’ll just have to check a box on their tax forms.

But for people who did not buy their insurance through public health insurance exchanges, or who will face a penalty for being uninsured, filing taxes could be more complicated. To help navigate this process, Tribuna has compiled some questions and answers.

What Does My Health Insurance Have to Do With Taxes

The tax process is the government’s way to enforce the health care law’s individual insurance mandate and to reconcile the financial assistance provided to help people buy coverage.

People who received discounted insurance might have to pay some back — or they may get a refund.

Close to 60,000 Connecticut residents received federal subsidies to discount their health insurance premiums last year. Those subsidies are actually tax credits, paid in advance to a person’s insurance company. The amount is based on a person’s income.

If you received one of those tax credits, you’ll have to reconcile the discount you received with your actual income. If you earned more than anticipated when you applied for coverage, you might have to pay back some of the money used to discount your premiums. If you earned less, you could get some money back, since you’d be entitled to a larger tax credit than the government already paid.

If you have not purchased health insurance, you may face a penalty for being uninsured.

What Are the Tax Penalties? How Are They Calculated?

For the 2014 tax season, the Individual Shared Responsibility fee for not having insurance was $95 per adult and $47.50 per child (up to $285 for a family) or 1% of your income – whichever was greater. The monthly fee is 1/12 of the total fee for each month you don’t have coverage or an exemption. See Individual mandate for more details on the fee.

In 2015, the Individual Shared Responsibility fee for not having insurance is $325 per adult and $162.50 per child (up to $975 for a family) or 2% of your taxable income – whichever is greater. The monthly fee is 1/12 of the total fee for each month you don’t have coverage or an exemption. See Individual mandate for more details on the fee.

In 2016, the Individual Shared Responsibility fee for not having insurance is $695 per adult and $347.50 per child (up to $2,085 for a family), or it’s 2.5% of your household income above the tax return filing threshold for your filing status – whichever is greater. You’ll pay 1/12 of the total fee for each full month in which a family member went without coverage or an exemption.

What Happens if I’m Not Exempt From Obamacare and Don’t Pay the Fee?

If you decide not to get coverage and don’t qualify for an exemption, then you’ll have to make an Individual Shared Responsibility payment on your income tax return for each month you went without minimum essential coverage.


Can I Go to Jail for Not Paying the Fee?

The Internal Revenue Service (IRS) cannot enforce the Individual Shared Responsibility Provision with jail time, liens or any other typical methods of collection. The only way for the IRS to collect the fee for not having health insurance, if you choose not to pay it, is for them to withhold the money you would get back from your Federal Income Tax Refund from the IRS after you file your income tax return.

How Do I File My TAXES for the Fee?

You’ll get a 1095-A, 1095-B or 1095-C form from your insurer about which months you had coverage. You’ll use this to file your taxes. If you had an exemption for one or more months, you may need an Electronic Confirmation Number (ECN) provided by the Health Insurance Marketplace. Find out details on how you file taxes for Obamacare by checking out our pages on filing taxes under the Affordable Care Act.

What are the Obamacare Exemptions?

The mandate’s exemptions cover many situations including: members of certain religious groups and Native American tribes, undocumented immigrants (who are not eligible for health insurance subsidies under the law), incarcerated individuals, people whose incomes are so low they don’t have to file taxes (in 2014, it was $10,150 for an individual or $20,300 for a married couple), people for whom health insurance is considered unaffordable (where insurance premiums after employer contributions or federal subsidies exceed limits of family income) and those going without insurance for less than three months in a row.

Some rules exempt you for up to three months, and others exempt you for the calendar year. You won’t owe the fee for the months you have an exemption. However, the goal isn’t to simply go without coverage or to pay the fee. Some exemptions (mainly hardship exemptions) will not only exempt you from owing the fee, but will also qualify you for special enrollment, thereby allowing you to get medical insurance outside of open enrollment. Make sure to apply for exemptions at HealthCare.Gov, as many exemptions require an ECN.

If you belong to any of the groups listed below, you are exempt from Obamacare’s mandate to “obtain minimum essential coverage” (i.e. buy insurance):

Unaffordable Coverage Options – People who would have to pay more than 8% of their household income modified adjusted gross income (MAGI) for the lowest-priced Marketplace Health Insurance after subsidies qualify for this exemption. If your employer insurance is unaffordable, costing more than 9.5% of MAGI after employer contributions for employee-only coverage, you will probably qualify for this exemption (an aggregate cost of 8% for households qualifies for a Hardship Exemption). You must apply for this exemption. Remember that your MAGI is not the same as your taxable income; it includes the amounts you invested into non-taxable savings accounts, income from Social Security and educational expenses.

For more information on health care coverage:

Access Health CT: or call 1-855-805-4325.

Connecticut Department of Social Services: or call 1-855-6-CONNECT.

Or visit the federal government website,, with written information available in Portuguese and Spanish or call 1-800-318-2596.


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