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

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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The lowdown...

  • If you do not have health insurance but can afford it, you will be responsible for paying a penalty fee under the individual mandate associated with the Affordable Care Act
  • You will owe this fee for any month you do not have qualifying coverage
  • However, there are some exemptions to this penalty
  • You will the pay the fee when you file your federal tax returns for the previous year
  • There are no liens, levies, or criminal penalties for not paying the fee, but the IRS will hold back the fee from any future tax refunds

If you do not want health insurance and choose not to get it, but can afford it based on your income, you will be responsible for paying a fine known as the individual shared responsible payment. You will owe this fee for any month you or your dependents did not have qualifying coverage.

You should look for at least major medical coverage to avoid a tax penalty. Enter your zip above to compare the most affordable plans in your state.

What is qualifying coverage?

Qualifying coverage refers to any health insurance plan that provides minimum essential coverage under the guidelines in the Affordable Care Act.

Examples of health insurance plans that meet this criteria includes plans bought on the health insurance marketplace, Medicare, Medicaid, Tricare, COBRA, and most job-based plans.

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How much is the fee?


The fee can be calculated in one of two ways. It will be calculated either based on a percentage of your income or a specific fine per person. You will have to pay whichever is higher.

In 2016, you will either be responsible for paying 2.5 percent of your household income or $695 per person or $347.50 per child in the household.

This fee will increase every year and is meant to be about the same cost as some of the cheaper health plans.

There is a maximum amount for these fines which is equivalent to the total yearly premium for the average price of a Bronze plan that you can purchase through the marketplace if you are being charged by a percentage of your income.

If you are being fined per person, the maximum amount is $2,085 per household.

You will only have to pay for the people in your household who do not have insurance coverage. If you had insurance for part of the year, the fee will only be 1/12th of the annual amount for each month that you went without health insurance.

Exemptions to the Individual Mandate


There are several exemptions to this individual mandate that you may qualify for. These can include hardship exemptions, a short coverage gap exemption, income below the filing threshold, coverage being considered not affordable based on income, and several other exemptions based on varying circumstances.

You may qualify for a short coverage gap if you went without health insurance for less than three consecutive months during the year. You can only claim this exemption once during any given year.

To be eligible to claim an exemption due to insurance being unaffordable based on your income, you will need to prove that the minimum amount you would have had to pay is more than 8 percent of your household income.

If your total household or personal income was less than the minimum threshold for filing a tax return, you will not be responsible for paying the fee because the fee is assessed through your tax returns for that year.

Additional exemptions that you may qualify for include a gap in CHIP coverage or a resident of a state that did not expand Medicaid. There are also hardship exemptions which can vary depending on your specific situation.

You will need to show proof of your hardship. There are certain residency exemptions, as well, for those who spend most of their time in a given year out of the United States.

When do you pay the fee and what happens if you don’t?


You will pay this fee on your income tax return for any month that you did not have the minimum essential coverage during the previous year. You should get either a 1095-A, B, or C form from your insurance company for any month that you were covered by that company.

You may need the ECN number given to you by the healthcare marketplace in order to file for an exemption.

The Internal Revenue Service (IRS) is not legally allowed to enforce the individual shared responsibility fee with many of the usual means of collection. It is not enforceable with jail time, liens on your assets, or additional fines.

If you do not pay the fee, money will be withheld from your federal income tax refund the following year.

Health insurance protects you medically and financially; keep your family safe and avoid useless fines by entering your zip code below to compare private health insurance plans for free.