I took it upon myself to sort through the new 1040 requirements for the Affordable Care Act; commonly referred to as Obamacare. Scary, I know.
With Jonathan Gruber stating Congress only passed Obamacare because of its ‘lack of transparency‘, crafty politicians have kept themselves employed by overhauling the healthcare system and further complicating my 1040 filing.
Fortunately, I already have healthcare coverage and simply check the ‘Full-year coverage’ box on line 61 and I’m done. If you’re covered and your accountant is charging $100 extra to check this new healthcare box, find a new accountant!
For those not covered as of January 1, 2014 , there are a ‘few’ exemptions to keep you from making the ‘shared responsibility payment’ for not having healthcare coverage:
- Your annual health insurance premiums are more than 8% of your household income (so if you make less than ~$22,500/year, you’re probably exempt).
- You have a gap in coverage for less than 3 consecutive months.
- Other various reasons you could be exempt: member of Indian Tribe, member of a religious sect, in prison, you’re on a nice long vacation out of the country, you’re homeless, you don’t pay your electricity/water bill, your wife/husband is violent, your family member recently died, your house burns to the ground or is flooded, you filed bankruptcy recently. You can read the ‘hardship exemptions’ here.
If you’re not exempt, you’re fined. Or in Chief Justice Roberts words, taxed:
“The Affordable Care Act’s requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax. Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness.”
I’d say it is Roberts’ role to protect taxpayers from scheming politicians. He was the deciding factor in the 5-4 vote to pass Obamacare. So Roberts can be blamed for the thousands of new IRS agents hired to force the Obamacare tax upon us.
The sly politicians aren’t calling it a tax or penalty though; it’s a “shared responsibility payment“. This payment is either a percentage of your income or flat dollar amount, whichever is greater. For each month you aren’t covered, you pay 1/12th of the annual payment. This annual payment is either 1% of your income or $95/per adult and $47.50/per child (with a max payment of $285). If your income is $1,000,000 you don’t pay a $10,000(1%) fine, the payment is capped at the average cost for a healthcare plan, which is ~$150/month. So the max fine for an individual would be ~$1,800.
The IRS has some great examples to show you how to pay your fine/tax/shared responsibility payment…
If you want to read more about exemptions, visit the IRS website here.
If you want to read more about calculating your tax/fine, visit this IRS link.
Good luck figuring out the rest of your 1040!