I recently blogged about the affect recent health care legislation, or Obama Care, will have on businesses in 2014 (Click here to read that post). However, individuals are also affected by the sweeping changes contained in Obama Care. The numerous provisions of Obama Care, most of which become effective in 2014, attempt to change both the way businesses offer their employees health insurance and the way that individuals, without employer sponsored health insurance, purchase health insurance.
Beginning in 2014, individuals are required to have health insurance. The new legislation makes it possible for individuals to purchase health insurance through health insurance exchanges that will be set up by individual states or the federal government. Subsidies may be available to help taxpayers pay for health insurance. These subsidies may be available for families whose household income is less than 400% of the federal poverty level (in 2013, 400% of the federal poverty level for a family of four is $94,200). Click here for more information.
The newly created health insurance exchanges are scheduled to be open for business on October 1, 2013. While the insurance mandate goes into effect on January 1, 2014, individuals will have until March 31, 2014 to enroll in a health insurance plan before any penalties start to kick in. The penalties start gradually in 2014 before peaking in 2016. These penalties will be accessed on an individual’s tax return. Below are the penalties that taxpayers will be subject to if they are not covered by a health insurance plan by the March 31 deadline.
2014 Tax Year:
Families — $285 or 1% of total household income, whichever is greater.
Individual Adults — $95 or 1% of total household income.
2015 Tax Year:
Families — $975 or 2% of income, whichever is greater.
Individual Adults — $325 or 1% of income.
2016 Tax Year:
Families — $2,085 or 2.5% of income, whichever is greater.
Individual Adults — $695 or 2.5% of income.
Written by Phoenix Arizona QDRO Attorney Shad Brown