In 2019, the Affordable Care Act (ACA) required most Americans to have health insurance or pay a penalty. This penalty was called the individual shared responsibility payment. It’s important to note that the penalty no longer applies in 2020, but it was in effect in 2019. So if you didn’t have health insurance in 2019, you may have paid a penalty.
Who Is Subject to the Penalty?
Generally, the penalty applied to any taxpayer who didn’t have qualifying health insurance coverage for at least nine months of the year. The penalty applied to everyone in the household, including any dependents. There are some exceptions, however. You don’t have to pay the penalty if you meet one of the following criteria:
- Your income was low enough that you didn’t have to file a tax return
- You were uninsured for less than three months
- You qualified for an exemption from the requirement to have health insurance
- You lived outside the U.S. for at least 330 days of the year
If you don’t meet any of the criteria above, then you may be subject to the penalty.
How Much Was the Penalty?
The amount of the penalty varied from year to year, but in 2019, it was the greater of two amounts: either 2.5% of your household income above the tax filing threshold for your filing status, or a flat fee of $695 per adult in the household and $347.50 per child, up to a maximum of $2,085 per household.
For example, if you’re a single filer with an income of $50,000 and no health insurance, you would owe the greater of 2.5% of $20,000 ($500) or the flat fee of $695, which is $695. On the other hand, if you’re a married couple with an income of $100,000 and two children, you would owe the greater of 2.5% of $50,000 ($1,250) or the flat fee of $2,085 ($695 + $347.50 + $347.50), which is $2,085.
What If I Couldn’t Afford Health Insurance?
If you couldn’t afford health insurance, you may have been eligible for an exemption from the penalty. To qualify for an exemption, you must have been able to show that the cost of health insurance would have exceeded 8% of your household income.
You could also have qualified for an exemption if you were eligible for Medicaid, but your state didn’t choose to expand Medicaid eligibility under the ACA.
How Do I Know if I Owe a Penalty?
When you file your taxes, you’ll need to fill out a form called the Shared Responsibility Payment Worksheet. This form helps you calculate the amount of the penalty you owe, if any. Once you know the amount, you’ll include it on your tax return. If you owe a penalty, you’ll need to pay it when you file your taxes.
What If I Owe a Penalty?
If you owe a penalty, you’ll need to pay it when you file your taxes. The IRS may also charge interest and fees on any unpaid penalty. Additionally, the IRS may withhold any refund you’re due until you pay the penalty.
Conclusion
In 2019, the ACA required most Americans to have health insurance or pay a penalty. This penalty was called the individual shared responsibility payment. If you didn’t have qualifying health insurance coverage for at least nine months of the year and you don’t meet any of the exemptions, you may owe a penalty. The amount of the penalty is either 2.5% of your household income above the tax filing threshold for your filing status, or a flat fee of $695 per adult in the household and $347.50 per child, up to a maximum of $2,085 per household. If you owe a penalty, you’ll need to pay it when you file your taxes or the IRS may charge interest and fees on any unpaid penalty.