You do your income taxes for 2014 and learn you have to pay a penalty for not having had health insurance. Worse yet, you didn't sign up during open enrollment for health coverage in 2015, and find that you'll face an even higher penalty next tax season. All is not lost. Unless you live in Colorado, Idaho or Massachusetts, you can take advantage of a special extension and sign up for health insurance on the government-run marketplace or directly through a health insurer. But don't delay. In the 37 states where the federal government runs the marketplace, the extension runs through April 30. In states that run their own marketplaces, the cutoff varies. Some end in mid-April and some at the end of the month like the federal marketplace. (Colorado, Idaho and Massachusetts opted not to extend their enrollment periods.)
Sign up sooner to saveThe sooner you sign up for health insurance the better, says Kev Coleman, head of research and data for HealthPocket, a Sunnyvale, California-based company that ranks and compares health plans. Coverage doesn't start immediately, and you still will have to pay the penalty for the period in 2015 that you didn't have coverage. But if you sign up and get coverage, your penalty will be prorated, he says. You will pay one-twelfth of the annual penalty for each month that you are uninsured. You can't eliminate the penalty for 2014, though. If you didn't have insurance, the government will deduct the penalty from any federal income tax refund you may be due. Open enrollment for health insurance for 2015 began in November and ended Feb. 15. When open enrollment closes, the only way you can get health insurance before the next open enrollment period is to qualify for a special exception. Special exceptions include life-changing events such as a birth or adoption of a child, marriage or divorce, or loss of a job or health coverage. You also may qualify for a special exception if you move outside your plan's coverage area.
Penalties for uninsured depend on family sizeThe rules for calculating the penalty for being uninsured are somewhat convoluted, Coleman says. Here's what you need to know:
• For 2014, the fee for not having health coverage is $95 per adult or 1 percent of your annual household income, whichever is the higher of the two.• The fee for not having coverage in 2015 is $325 per adult or 2 percent of household income, whichever is greater. • The penalty for each child under 18 is half that of adults in both years. • For those who pay the flat fee version of the penalty, the maximum cost for a family in 2014 is $285 and, in 2015, it is $975. The penalty is based on your family's modified adjusted gross income and is capped at the national average premium for a bronze health insurance plan, Coleman notes. Bronze plans are generally the least expensive of the four tiers of plans available: bronze, silver, gold and platinum.
Extension based on the honor systemTechnically, you only qualify for this special extension if you didn't know about the tax penalty for going without health insurance in 2014. But there's no way the government can check whether you knew or not. The government is providing the extension because officials think many consumers were unaware of the penalty or didn't understand it, Coleman says. You can get health insurance quotes on or off the government-run marketplace during a special enrollment period if you qualify. However, you will qualify for a subsidy or premium tax credit to help pay your premiums only if you meet certain income requirements and buy through the marketplace. The premium tax credit varies depending on your household income. To qualify your income must be between one to four times the federal poverty level. In 2015, that's between $23,850 and $95,400 for a family of four. Families with incomes below the federal poverty level may qualify for Medicaid or the Children's Health Insurance Program (CHIP), federal- and state-funded health insurance programs. You can sign up for Medicaid or CHIP at anytime if you qualify.
The next regular open enrollment period begins in November and is for coverage in 2016.