Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com.

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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The lowdown...

  • Your health insurance coverage status is reported to the federal government when you file your taxes
  • Health insurance companies and employers notify the IRS of which employees and beneficiaries are covered under their plan
  • Employers will also send you documentation of your health insurance to provide proof to the government
  • If you do not have health insurance, you may be responsible for paying the individual mandate penalty fine
  • If you do not pay the fine, the IRS will withhold the amount from your future tax returns. There are no criminal penalties for not paying the penalty fine

How will the government know if I have health insurance?

The status of your health insurance coverage is reported to the federal government when you file your tax returns. Insurance companies and employers send documentation to the Internal Revenue Service informing them of who is covered under their plans. Additionally, these organizations will send documentation to the people that they insure. You are required to report whether or not you have health insurance when you file your tax returns, as well.

Enter your zip code above and get covered before tax season today!

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What happens if I do not have health insurance?

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If you do not have health insurance, you will most likely be responsible for paying the individual mandate penalty fine, unless you qualify for an exemption. The fee is calculated in one of two ways and you will be required to pay whichever of the two is higher. It will either be 2.5 percent of your household income with a maximum that is equivalent to the average price of a bronze plan sold on the healthcare exchange marketplace or it will be $695 per adult and $347.50 per child with a maximum of $2,085.

When the percentage is calculated, only your household income that is above the tax filing threshold will be counted towards the amount. If you have coverage for part of the year, you will only have to pay the fine for the months that you went without coverage and for those in your household without coverage.

You pay the fee when you file your tax returns for the previous year. If you do not pay the fine at the time, the IRS will withhold it from your future tax returns. There are no criminal penalties associated with not paying the fee and the IRS will not enforce any typical means of collection such as liens or levies if you do not pay it.

How do I qualify for an exemption from the individual mandate fine?

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Under certain circumstances, you may qualify for an exemption from the individual mandate penalty fine if you do not have health insurance. There are several different types of exemptions and you can apply for them online on the healthcare exchange website.

If you only went without health insurance coverage for less than three consecutive months, you might be eligible for a short coverage gap exemption.

You are only able to use this exemption once in any given year. If your annual income is less than the minimum amount necessary to file a tax return, you will not need to pay the fine.

If coverage was considered unaffordable for you based on your household income, you also may qualify for an exemption. Health insurance is determined to be unaffordable if the cheapest option available to you was still more than eight percent of your total household income.

Members of certain religious sects may also be eligible for some exemptions.

How do I enroll in a health insurance plan?

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The open enrollment period to purchase a health plan through the marketplace started on November 1, 2016, and ended on January 31, 2017. If you purchased your plan before December 15, 2016, it should have begun on January 1, 2017.

If you missed the open enrollment period, you cannot purchase a marketplace plan and may be responsible for paying the individual mandate fine. However, under some circumstances, you may qualify for a special enrollment period.

Some events that might qualify you for a special enrollment period include getting married, having a child or adopting, moving to a different area that offers different health options, and losing health insurance due to a change in job status, divorce, or a loss of eligibility for public insurance programs such as Medicaid and CHIP.

Private insurance companies do not have a specific open enrollment period the way the healthcare exchange marketplace does. However, after the Affordable Care Act passed, many insurance companies now follow a similar timeline and enrollment schedule. You should look around and speak to your insurance company about your options and deadlines.

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Will the government know if I have health insurance?

Employers and health insurance companies report your health insurance status to the IRS and you are expected to fill out a form when you file your taxes, as well. If you do not have health insurance for the year, you may be subject to a penalty fine.

Get covered when it counts; enter your zip code below and compare free online health insurance quotes.