How much may Obamacare penalties cost you?

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On January 1, 2014, the new requirement for mandatory health insurance will come into effect, requiring that all American citizens have become adequately insured. Obamacare, as it has come to be known, is not optional; those who fail to be insured come the start of next year will face penalty charges.

What are the penalty charges for not being insured?

Business CareFailure to be insured in 2014 will trigger an automatic penalty fee of:

  •          $95 per adult
  •         $47.50 per child

Furthermore, if an individual has insurance but their children whom are listed as dependents so not, additional penalties may apply for failing to insure these minors.

The penalty charges will rise each year, with non-adherents needing to pay the greatest of either a fixed penalty or a percentage of their income, as follows:

  •          In 2014 – $95 per adult or 1% of household income
  •          In 2015 – $325 per adult or 2% of household income
  •          In 2016 – $695 per adult or 2.5% of household income.

For children, the penalties will be reduced by 50%. There will be a cap on the total amount of penalties that can be accrued by any household. This cap with equate to the annual cost of a basic health insurance policy through the state health insurance exchange.

Obamacare Infographic (scroll down if you want to use it on your website)

What is the point of the penalties?

The fact that the total amount of penalties that can be charged is the same as a basic health insurance policy does suggest that the penalties are more of an incentive to insure rather than a punishment for not insuring. It will work out better for individuals and households to bite the bullet and arrange coverage than amass numerous penalties, especially if they remain uninsured beyond 2014 when the penalty charges rise. Collected dues from penalties will be funneled back into the healthcare system.

How will penalties be collected?

Enforcement will be undertaken by the Internal Revenue Service, but the focus will be more on encouraging people to get insurance rather than heavily enforcing penalties with aggressive collection techniques. Nevertheless, amounts owed will be collected through tax returns.

How many Americans may be uninsured in 2014?

The exact figure is unknown, however, in 2012 an estimated calculation made by the Congressional Budget Office projected that in 2016 there will be 30 million Americans without health insurance that is compliant with the Obamacare guidelines. Of these 30 million, the estimate suggested that 6 million of these individual will face penalties for being uninsured.

How can a penalty be avoided?

Individuals and households can ensure that they don’t receive a penalty by making sure they have health insurance coverage that meets the law’s new minimum threshold. This is called “Minimum Essential Coverage.”

What are the rules for Minimal Essential Coverage?

The rules are that this type of insurance as to be:

  • Offered by an insurer or small employer that offers health insurance as part of a benefits package
  • This means that it will be the new minimal standard than individual insurers make available in 2014, as well as the mandatory basic package offered by employers from 2015

Consumers should be aware that if they take out insurance in 2014, it will more than likely meet the law’s minimum requirement. If, however, an insurance policy only gives limited benefits, the minimal essential coverage threshold may not be satisfied. For example, if the health insurance policy is only for dental treatment, this is not sufficient coverage and the policy holder may face a penalty for not having the requisite level of health insurance coverage.

Who does not need to get health insurance in 2014?

According to the Obamacare law, The Affordable Care Act, there are certain categories of people who will not be mandated to have health insurance coverage in 2014. This includes Americans on low incomes.

If an individual has an income that is too low for them to file a deferral tax return, they will be exempt from having to get health insurance for the next year.

The categories of people exempted from getting health insurance are, therefore:

  • People on low incomes
  • People whose religious beliefs prevent them from accepting insurance benefits
  • Members of a recognized health care sharing ministry
  • Indian Tribes that are Federally recognized
  • Those meeting the criteria for hardship exemptions
  • Those who are not American citizens, lawful aliens or U.S. nationals
  • Inmates in penal institutions i.e. jails, prisons and correctional facilities
  • Those with short gaps in between being insured of 2 or 3 months

Who does need to get health insurance in 2014?

It comes down to the issue of affordability and meeting the threshold. An individual must get health insurance if they meet the threshold of 8% of annual income. This is for the cheapest policy offering minimum essential coverage.

In 2014, it will therefore be much cheaper and cost effective to get minimal coverage rather than pay penalties and remain uninsured. For more information about the Affordable Care Act, visit

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7 thoughts on “How much may Obamacare penalties cost you?

  1. Maureen McKinney

    Kerry USN Retired – what a strange comment to make! The reality is that universal health care has been a long time coming to the United States and has arrived not a moment too soon. Other countries in the world, including Canada, the United Kingdom, many countries in Europe and Israel have similar systems with great benefit to their citizens. Healthcare isn’t a political issue – it is a human rights issue.

  2. deadendfuture

    No it isn’t a human rights issue at all. To say so is absolutely ludicrous, short-sighted, and extremely uninformed. Each person is responsible for themselves. You cannot mandate people to force them to take on burdens outside their own homes. Those same countries that have socialized medicine also have mounting debt problems and unstable economies. Thanks to Obama’s incompetence and lack of fiscal ability and accountability, I have a hard enough time making ends meet as it is. The last thing I need is another bill and an increase in the ones I already have. To short and sweet of it is, It isn’t my job to take care of you. That’s not being mean or selfish, that’s simply a fact of life. I don’t expect anyone else to take care of me and mine, either. In every example throughout recorded history, socialism has completely and utterly failed. What’s that old saying about the definition of insanity?

  3. Wayne Breezee

    The problem is you will need someone to take care of you at some point. This is what young/healthy people seem to miss. They could at any point go from being healthy to needing massive amounts of medical care. They then want insurance to pay for it, but don’t want to have to pay into it while they’re healthy. Also unlike other countries the US will not have a government run health insurance. You’ll choose the company you want and deal with a private company and not the government. We get to keep the best of the current healthcare system and have everyone insured without the government involved. (Other then requiring you have insurance) People are under the notion that we’re going to have a system like in the UK where the government runs the healthcare system and all choices are made by the government.

  4. Phil Hughes

    This Obamacare is a far cry from universal health care. Universal health care is health care provided by the state paid for by taxes and everyone is covered. Obamacare does not come close to that.

  5. MargaretJacobson

    If you prefer universal health care, no problem. Go to noted kingdom, Canada or any other country that will accept you ! Go where you feel accepted. Your choice. I feel that most of the productive members of our great society would prefer not to have socialized medicine . It is human right not to be obligated to pay for those who want a free ride in life (welfare etc).

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