Understanding the fee for not having health insurance coverage in 2016

Published on December 11, 2015

Did you know that having health insurance when you can afford it is the law? If you can afford health insurance, but choose not to get it for 2016, you may be required to pay a fee — sometimes called the “penalty,” “fine,” or “individual mandate” — when you file your 2016 federal income taxes.

The good news is, affordable coverage through the Health Insurance Marketplace® is available. After financial help, 7 out of 10 people can find plans with premiums of less than $75 dollars per month. If you enroll by December 15, 2015, your coverage will start January 1, 2016.

Want to see plans and prices available to you before you apply? You can preview 2016 plans and prices here — you may be surprised to learn just how affordable health insurance can be.

Breaking it down: the fee

Here are 5 quick facts about the fee for not having health coverage when you can afford it:

The fee is calculated 1 of 2 ways, depending on your situation. It’s either a percentage of your annual household income or a set amount for each person in your household who doesn’t have health insurance. When you file your federal income taxes, if you’re uninsured for more than 3 months despite having access to affordable coverage, you’ll be required to pay whichever amount is higher. Learn how to estimate the fee you’ll have to pay if you don’t have health insurance based on your situation.
The fee is increasing for 2016. For 2015, the penalty for no health insurance is $325 per person or 2% of your annual household income – whichever is higher. For 2016, the fee is $695 or 2.5% of your income — whichever is higher. For many people, that’s more than the yearly cost of health plans they can find on HealthCare.gov.
Every month without coverage counts. The fee is calculated based on the number of months you and your household went without . The more months you go without health coverage, the higher the fee, up to the maximum. (But if you’re uncovered for only 1 or 2 consecutive months, you don’t have to pay the fee at all.)
For some people, exemptions from the fee are available. People with very low incomes and those who meet other specific conditions can get an exemption from the requirement to have health insurance and won’t have to pay the fee. Learn more exemptions, and see if you qualify.
You have until January 31 to enroll in a 2016 plan to avoid the fee. The final deadline to sign up for 2016 coverage is January 31. A Special Enrollment Period around the April 15 tax filing deadline won’t be offered in 2016. If you don’t enroll by then, you could have to wait another year to get coverage and may have to pay the fee when you file your 2016 income taxes.