The Affordable Care Act, or Obamacare, represents a massive change in the way that health insurance is taken care of in the United States. With such a massive change comes a lot of confusion. One of the most confusing aspects of Obamacare is that there are penalties for people who do not opt into the system. Many people are finding themselves angry and confused that a system designed to lower their expenses threatens to charge them a fine. However, most people will not have to worry about any fines or cost increases.
If you do not have a qualifying insurance plan for three consecutive months after Obamacare began in 2014, you will be subject to fines. Since this period started in January, you needed to be covered by an insurance plan by March 31, 2014. However, since your insurance plan does not become effective immediately, you need to enroll a month ahead of time.
There are many groups of people who will not be fined if they fail to enroll in a qualified insurance plan. It is estimated that only a very small fraction of uninsured people will be penalized. People who cannot afford the most inexpensive plan because it costs more than 8% of their income will not be subject to penalties. You may also be exempt from the fines if your religious beliefs prohibit the purchase of insurance. People who are Native Americans or non-citizens will also be exempt from Obamacare.
The penalties that are incurred under The Affordable Care Act are not charged at a flat rate. They are determined through many factors. The minimum fine is calculated on a per-person basis. The minimum penalties are $95 per adult and $47.50 per child. These per-person fines have a maximum of $285 per family. Depending on your income, you may have to pay more. Individuals must take their annual income, subtract $10,000 and multiply it by 1% to calculate their fine. People with families subtract $20,000 from their income and multiply it by 1%. If this calculation is higher than the minimum fine that you would be responsible for, then it will be the amount that you have to pay.
If you do incur a fine due to Obamacare, you will be held responsible for it when paying your taxes. IRS forms include a section for your insurance information. If you are owed a refund after paying your taxes, the amount of your fine will be removed from your refund. If your refund is not enough to pay for your fine, you will be asked to pay the IRS for the difference. If you do not pay them directly, the IRS will continue to take money from your future tax refunds until the debt is paid.
Ultimately, the best way to avoid a fine is to enroll in a qualified insurance plan. Although the system for enrollment might be confusing, there is ample time to research The Affordable Care Act and find out what kind of program will work for you.
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