The Affordable Care Act 2020 and Tax Penalties You Should Know About

We hear about it all the time on the news but what is the Affordable Care Act, also known as Obamacare, and what does it exactly do?

The Affordable Care Act (ACA) is a comprehensive healthcare reform signed into law by President Barack Obama in March 2010. The law includes a list of health-related provisions that extended health insurance coverage to millions of uninsured Americans.

The Act expanded Medicaid eligibility, created health insurance exchanges, and prevents insurance companies from denying coverage (or charging more) due to pre-existing conditions. It also allows children to remain on their parents’ insurance plan until age 26.

 

What Are The Tax Penalties for Not Having Insurance?

$695 per adult and $347.50 per child or 2.5% of annual income. Residents whose health insurance costs do not exceed a certain percentage of their income could face a penalty of up to nearly $2,100 per family, according to Covered California.

Are There Any Exemptions From Paying The Tax Penalty?

Yes. Individuals who aren’t required to file California income taxes don’t have to maintain minimum essential coverage (MEC).

Additional exemptions may apply:

  • Individuals who obtain a hardship exemption from the exchange
  • Members of certain religious sects who obtain a religious-conscience certificate of exemption
  • Individuals enrolled in limited-scope coverage under Medi-Cal or other similar programs
  • Health care sharing ministry members
  • Incarcerated individuals
  • Non-US citizens or nationals who are not lawfully present in the US
  • Tribal members
  • Certain expatriates
  • Residents of another US state or US territory