December 17, 2014 News

Avoid Paying a Penalty Under Obamacare

The Affordable Care Act (ACA), or Obamacare, requires most U.S. citizens to obtain health coverage or pay a penalty. The individual shared responsibility provision, or individual mandate, is a key component of the ACA that’s designed to offset the insurance risk pool by encouraging healthy individuals to buy into the market, thus compensating for the costs for those who are unhealthy.

To avoid paying the penalty, individuals must obtain minimum essential coverage during an open enrollment period. For 2015, open enrollment runs from November 15, 2014 through February 15, 2015. For coverage effective January 1, 2015, applications should be completed by December 20, 2014.

What is Minimum Essential Coverage?

Minimum essential coverage includes the following:

  • Health insurance coverage provided by your employer
  • Health insurance purchased through the NY State of HealthTM
  • Coverage provided under a government-sponsored program such as Medicare or Medicaid
  • Health insurance purchased directly from an insurance company
  • Other health insurance coverage that is recognized by the Department of Health & Human Services as minimum essential coverage.

Penalties for Not Obtaining Coverage

If you miss this deadline and don’t meet the exception requirements, you will be required to pay a penalty. Here’s a breakdown of penalties for individuals and families in 2015 and 2016:

  • 2015: Penalty is $325 per adult and $162.50 per child (up to $975 for a family) or 2.0% of family income, whichever is greater.
  • 2016 and beyond: Penalty is $695 per adult and $347.50 per child (up to $2,085 for a family) or 2.5% of family income, whichever is greater.

Penalties for failing to comply with the law are collected by the Internal Revenue Service through the income tax process. The fee is based on the number of months in any given year an individual is without coverage.

If you choose to purchase coverage through the state-based marketplace, you may be eligible for a tax credit, which lowers the amount of money you pay out of pocket. Visit to find out if you qualify for health care tax credits.

If you’re still not sure whether the individual mandate applies to you, the Kaiser Family Foundation’s individual mandate flowchart can help you determine how it works.

Bob Hinckley
About the Author

Bob Hinckley joined CDPHP in 2006. He was appointed senior vice president of government and external relations, and was promoted to senior vice president of strategy and communications, and chief strategy officer in 2013. Prior to CDPHP, Hinckley worked for New York State Department of Health as director of public affairs, then deputy commissioner for operations. Shortly after, Bob served as senior deputy secretary of health and human services under New York State Governor, George E. Pataki. Hinckley is chairman of the NYS Health Plan Association board of directors, and formerly served as vice chair of the Commission on Healthcare Facilities in the 21st Century. Bob earned a bachelor’s degree in political science from Colgate University.

One Response to “Avoid Paying a Penalty Under Obamacare”

  1. Colin

    Nice post. Another alternative to paying the increasing 2016 ObamaCare penalty is to join a Christian healthcare sharing ministry, which is one of the offical exemptions. For many it will provide insurance and still be less expensive than paying the penalty.

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