New Year, New Individual Mandate Penalty
January 1, 2015
Happy New Year from the Affordable Care Act!
You probably haven’t even yet seen the individual mandate from the Affordable Care Act on an actual tax form. Unless you’ve been looking at the new 1040 (and I hope, gentle readers, that most of you had better things to do with your holidays) you haven’t yet seen the mandate in action. It’s on line 61, and it results in extra tax liability if you failed to obtain health insurance coverage for part of the year 2014.
However, it’s also worth remembering that the penalty will be doubled (or more than doubled) for 2015. 2014’s penalty is $95 or 1% of your household income, whichever is higher. 2015’s penalty is $325 or 2% of your household income, whichever comes higher.
If you are covered only for part of the year, you are assessed 1/12 of the annual penalty for each month that you were not covered.
My impression of the 2014 penalty is that it was relatively toothless for a lot of taxpayers, both because of its relatively low amount and because I expect hardship exemptions to be given out relatively generously. I don’t expect the 2015 penalty to be similar.
For a long time, squabbles over the individual mandate seemed like a far-off, abstract thing. That’s no longer the case. The individual mandate now has real consequences, and it should be taken seriously by taxpayers and policymakers alike.