How Much is the Obama Care (Affordable Care Act or ACA) Individual Shared Responsibility Payment?

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How Much Is the Obamacare Tax Penalty for 2017?



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How Much Is the Obamacare Tax Penalty for 2017?

For the 2017 tax year, the Obamacare tax penalty is still in force.

Under the Affordable Care Act, most Americans are required to have health insurance. When you file your taxes in April, you'll have to report whether or not you enrolled by the deadline.

For tax year 2017, the deadline was January 31, 2017. For 2018, the deadline for most people will be December 15, 2017.

If you don't get covered on time and you don't qualify for an exemption, you'll have to pay a penalty when you file your tax return. The official name for this penalty is the individual shared responsibility payment.

Did Trump Cancel the Obamacare Tax Penalty?

The Trump administration has not canceled the Obamacare tax penalty and the IRS has declared that the penalty is still in force. This is true despite an early 2017 decision to allow citizens to continue to file "silent returns," meaning returns that leave blank the question about whether or not you had health coverage for the tax year.

With the maximum penalty amount climbing sharply (see below), it's currently unwise to go without health insurance on the assumption that the penalty won't be enforced.

Calculating the Obamacare Tax Penalty

The Obamacare tax penalty is calculated according to the number of months you don't have coverage: You'll owe one-twelfth of the annual penalty amount for each month you go without insurance. As long as you have coverage for at least one day of any particular month, you're considered covered for that month. And you're allowed one annual gap of fewer than three months during which you can avoid a penalty.

For 2017, the penalty is $695 per adult plus $347.50 per child (up to a maximum of $2,085 per family) or 2.5% of annual household income, whichever is greater. You'll make this payment when you file your taxes in April 2018

We will publish the penalty amounts for 2018 when they become available.

For purposes of determining the penalty, "income" is defined as what your household earns in excess of the income-tax filing threshold. In 2016 (the latest available figures) the threshold was $10,350 for an individual and $20,700 for married couples filing jointly.

EXAMPLE

Rebecca is a single woman without health insurance who earns $50,000 in 2016. When she files her taxes in April 2017, her tax penalty will be based on $39,650 of her income. ($50,000 minus $10,350 equals $39,650.) Two-and-one-half percent of $39,650 is $991.25. Because that amount is greater than $695, Rebecca's penalty will be $991.27.

As mentioned above, if you have insurance for part of the year, your penalty will be reduced proportionately. And the penalty can never exceed the sum of the national average premium for a bronze policy purchased through the exchange. For 2017, the monthly maximum is steep: $272 for an individual and up to $1,360 for a family of five or more.

Keep in mind that paying the fee doesn’t get you any kind of health coverage. You will have to pay the entire cost of your medical care on top of any fees that you owe.

The following video from the IRS explains the basics of the Obamacare tax penalty.

 

Obamacare Tax Penalty for 2017

The following table estimates the Obamacare tax penalty for a single taxpayer who is uninsured for the entire year in 2017. As discussed above, "income" is the amount earned in excess of $10,350, the most recently available income tax filing threshold.

Annual Income Over $10,350  2.5% of income    2017 Obamacare Penalty    Per Month 
 $-    N/A     $0    $0  
 $5,000.00  $125.00  $695.00  $57.90
 $10,000.00  $250.00  $695.00  $57.90
 $15,000.00  $375.00  $695.00  $57.90
 $20,000.00  $500.00  $695.00  $57.90
 $25,000.00  $625.00  $695.00  $57.90
 $30,000.00  $750.00  $750.00  $62.50
 $35,000.00  $875.00  $875.00  $72.90
 $40,000.00  $1,000.00  $1,000.00  $83.33
 $45,000.00  $1,125.00  $1,125.00  $93.75
 $50,000.00  $1,250.00  $1,250.00  $104.17
 $55,000.00  $1,375.00  $1,375.00  $114.58
 $60,000.00  $1,500.00  $1,500.00  $125.00
 $65,000.00  $1,625.00  $1,625.00  $135.42
 $70,000.00  $1,750.00  $1,750.00  $145.83
 $75,000.00  $1,875.00  $1,875.00  $156.25
 $80,000.00  $2,000.00  $2,000.00  $166.67
 $85,000.00  $2,125.00  $2,125.00  $177.08
 $90,000.00  $2,250.00  $2,250.00  $187.50
 $95,000.00  $2,375.00  $2,375.00  $197.92
 $100,000.00  $2,500.00  $2,500.00  $208.33

Learn More

You can find an online calculator to help you determine your potential tax penalty at HealthInsurance.org.

To learn about what qualifies as health coverage under Obamacare and whether you are exempt, see Do I Have to Get Obamacare in New York?

For information about costs, see How Much Does Obamacare Cost in New York?

For tax help, see Obamacare and Taxes: What You Need to Know Before You File.


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