4. If you can afford it, you will need minimum essential coverage – or pay a fee

If you can afford health insurance and you don’t have coverage in 2014, you may have to pay a fee of 1% of your yearly income or $95 per person ($47.50 per child), whichever is higher. The fee increases to 2.5% of income or $695 per person in 2016. While the penalty seems relatively cheap, it is important to remember that without health insurance you will also be responsible for the entire cost of your medical care.

To avoid the fee, you need coverage that qualifies as minimum essential coverage. For 2014, you will be considered covered (and won’t have to pay a fee) if you have any of the following plans:

  • Any employer plan (including COBRA)
  • Any individual insurance plan that you already have
  • Any Marketplace plan
  • Medicaid
  • Medicare
  • Peace Corps Volunteer plans
  • The Children’s Health Insurance Program (CHIP)
  • TRICARE (active and retired military, families and survivors)
  • Veterans health care programs
If you don’t have coverage in 2014 you may not have to pay the fee if you:

  • Are a member of a federally recognized Indian tribe
  • Are insured for at least nine months of the year
  • Don’t have to file a tax return because of low income
  • Have a very low income and you cannot afford coverage (you must complete an application on the Marketplace to determine whether your income qualifies you for an exemption)
  • Participate in a health care sharing ministry
  • Would qualify for Medicaid (under the new income limits) but your state has chosen not to expand eligibility
  • Are a member of a recognized religious sect (such as the Amish and some Mennonite sects) that objects to health insurance
Tip: What determines if you can afford coverage? The IRS determines affordable coverage. Coverage is not considered affordable if it costs more than 9.5% of your pre-tax annual household income or if your income falls below income-tax thresholds.


Next: Important Dates to Know »



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