Avoid Penalties During Open Enrollment

The annual open enrollment period is from November 1 through January 31. This is when anyone can apply for health insurance through the health insurance marketplace or through insurance companies like BCBSND.

Who pays a tax penalty?
With ACA guidelines, the individual mandate requires everyone to have health insurance. There is a tax penalty for anyone who does not get insurance. Whether coverage is purchased directly or gained through a subsidy or tax credit, if it is not completed during the open enrollment period, you will face a penalty.

How much is the tax penalty?
The 2016 tax penalty is determined two different ways with the chosen penalty being the higher amount. For example, let’s say you choose not to buy health insurance for you, your spouse and one child with a combined annual household income of $65,000.

Per person

  • Includes anyone listed on your tax return without health insurance coverage
  • $695 per adult over 18
  • $347.50 per child under 18
  • The maximum fine is $2,085
  • Example tax penalty: 2 uninsured adults X $695 per person penalty = $1,390 + $347.50 per uninsured child penalty = a total penalty of $1,737.50

Income percentage

  • Based off of the total annual household income
  • 2.5% of household income above tax filing thresholds of $10,150 for individuals and $20,300 for couples
  • The maximum fine equals the national average cost for the annual premiums of a Bronze plan available on the federal insurance marketplace
  • Example tax penalty:  $65,000 annual household income – $20,300 tax filing threshold for a couple = $44,700 income above the tax filing threshold X 2.5% = a total penalty of $1,117.50

You would pay the higher amount of $1,737.50 in addition to all medical care costs you incur. These health costs will also not be at a negotiated rate.

What if it’s less than a year?
Going without coverage for more than two months, means you pay 1/12 the penalty outlined above for each month you are uninsured. In addition, you will pay medical costs while uninsured.

Additional resources
This information can help you determine if your adult children can stay on your health plan.

Want to understand more about open enrollment? Read our article for easy to understand terminology.