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Health Insurance and Penalties for 2016/2017

November 16, 2017


One of the most frequented topics I have encountered this year from my clients pertains to the health insurance mandate.


If an individual can afford health insurance, but chooses not to buy it, the individual must pay a fee called the individual shared responsibility payment. The fee is essentially a penalty/fine.


The fee extends to your spouse or tax dependents who don’t carry minimum essential coverage for any months within a calendar year.


The fee is applied on your federal tax return for the year you don’t have coverage.


There are exemptions to this fee/penalty. (Please consult a tax professional on these exemptions.)



Fee for Not Having Health Insurance in 2016/2017


Fees are calculated with two different approaches, with the taxpayer paying the higher of the two options of per household income vs per person. It’s also attached to inflation.  


Percentage of Income

2.5% of household income.

Maximum: Total yearly premium for the national average of a Bronze plan sold through the insurance marketplace


Per Person

$695 per adult

$347.50 per child under 18

Maximum: $2085


Paying the Fee


Percentage method:  Only part of your household income that’s above the yearly tax filing requirement is counted


Using the per-person method: You pay only for people in your household who don’t have insurance coverage.


Coverage for part of the year:  The fee is 1/12th of the annual amount for each month you (dependents) don’t have coverage. The short gap exemption can apply here if the lapse in coverage doesn’t exceed a threshold.  


You pay the fee when you file your tax return for the year you don’t have coverage.



Do unemployed people have to pay the fee?

This is entirely dependent on household income. Please contact me for additional information.


What happens if I don’t pay the fee?

The IRS will hold back the mount of the fee from any future tax refunds. There are no liens, levies, or criminal penalties for failing to pay the fee.


Thanks for reading and feel free to contact me regarding any questions about your tax obligations and small business issues which may arise.



Additional Resources:

Health Care Exemptions


Types of Health Insurance which Count as Coverage


Calculator for Individual Responsibility Payment

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