Lately I have been asked a lot of questions regarding the fines/taxes individuals and businesses will receive for not purchasing or offering health insurance.

Starting with individuals.  The reality is you do not have to buy insurance.  If you are currently uninsured, you can stay uninsured in 2014.  The only difference being that the federal government will now impose a fine for those who do not carry health insurance.  This fine will be paid when you file your taxes at the beginning of each year. 

Here is a breakdown of the penalty:

  • 2014 – $95   or 1% of your income  (which ever is greater)
  • 2015 – $325 or 2% of your income
  • 2016 – $695 or 2.5% of your income
  • 2017  – Has not yet been disclosed

So for a family with a combined income of $75,000 per year, they will be assessed a penalty of $750 for not having health insurance in 2014.  In 2015 that will go up to $1,500.  In 2016 it will be $1,875. 

Regarding Businesses.  Small businesses on the other hand with 50 or less employees do not have to offer health insurance and will not be assessed a penalty. 

Businesses with 51 or more employees must offer health insurance or face a penalty.  If you have 51 or more employees and you do not offer health insurance you will be fined $2,000 per employee. 

For Example:
If an employer has 70 employees but does not offer health insurance, the Affordable Health Care Act will not fine him/her for the first 30 employees, but will fine him/her for the remaining employees (40).  So, the employer will be fined $80,000.

The other potential fine/penalty employers with 51 or more employees may face is if they offer health insurance but it is deemed unaffordable.  If this is the case, the employer will face a $3,000 fine per employee.  Just as before, the first 30 employees are not counted.  Using the above example, the employer would see a fine of $120,000 for offering unaffordable health insurance.

For more information about what is considered “affordable” for business health insurance coverage, check back tomorrow.

As always, if you have specific questions you would like answered, give me a call!